US Treasury bonds continue to face sell-off
by Brian Turner
The sell-off of US Treasury bonds continued on Wednesday despite a second set of inflation data in two days that would seem positive to bonds.
Consumer price inflation fell 0.1 percent in May due to a drop in energy costs, although when food and energy prices were excluded form the data, inflation actually rose 0.1 percent.
Additionally, a dip in foreign purchases of Treasury bonds induced worries about future demand. One analyst said that the bond market was ignoring positive news and embracing negative news.
The 10-year Treasury bond was up 1.2 basis points to yield 4.125 percent at mid-day in New York.
In the eurozone, as well, sell-offs sent prices down and yields higher as comments from the head of the European Central Bank indicated that interest rates will not be cut. In addition, there was only lukewarm demand for bond sales in Italy, Germany, and Poland. The 10-year Bund was up 9.1 basis points to a yield of 3.3 percent.
In the UK, the 10-year gilt gained 8.3 basis points to yield 4.407 percent. Japanese 10-year government bonds gained 0.5 basis points to yield 1.240 percent in a sell-off in anticipation of Wednesday’s auction of a 20-year issue.
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