Rise In Yields Likely With Big U.S. Treasury Auctions

Big Treasury auctions in the United States could restart a rise in yields following a recent lull in the bond market, according to Reuters.

• The Treasury’s $271 billion of new offerings kicked off with a double auction on Monday, to be followed by auctioning $24 billion of 30-year bonds on Tuesday and a total of $151 billion in bills throughout the week.
• Investors said weak demand at the auctions could send bond prices lower and yields higher, albeit at a slower pace than that seen in the first quarter.
• Yields have declined since April 1 during a two-week pause in issuance, reversing the increase in February and March. This eased concerns that higher borrowing costs will hurt stocks.
• The benchmark 10-year offering climbed over 80 basis points in the first quarter on expectations of strong economic growth, higher inflation, and $4 billion in offerings to be issued this year.
• Some investors and strategists believe there may be greater demand for Treasuries at present versus March, capping any rise in rates.
• U.S. consumer price data for March will be released Tuesday, which may also drive yields higher as longer-term yields rise with inflation expectations.