The demand will only get bigger throughout the holiday week for US Treasuries. Recently, several auctions for U.S. government bonds have been held amid the market. And, naturally, there’s been great results and rippling demand.
The most recent auction saw 5-year U.S Treasury notes get auctioned off to eager buyers, resulting in a $35 billion sale. The new notes were auctioned off at a yield resulting in 1.595 percent.
Investors responded positively, of course. The demand for U.S. government bonds rose to its highest levels, which weren’t seen since last March. Market observers now think the demand for U.S. government debts will become ‘even more appealing in a lower yielding bond market,’ despite the Federal Reserve concluding their own bond buying program.
Recent market trading saw a 7/32 higher 10-year benchmark note, producing a yield of 2.282 percent. The yield was a little higher at the start of the year, though; at the start of 2014, the yield was at 3 percent.
Auction activity saw a reported $2.91 in bids for each offered dollar; the average for past sales reached 2.64. Indirect bidding, considered a barometer of sorts for foreign investor interest, reached 65 percent, compared to the last average of 49.8 percent.
A strengthening U.S. dollar, safer yields and a weakened global economy have essentially bolstered the popularity of U.S. bonds. They’re considered safer and much less volatile than other debts, such as those issued by institutions in the Eurozone. Of course, investors do seek riskier debts in a strengthening global economy, but the dismal conditions have made many turn to U.S. government bonds as a safer way of reaping yields.
The bond market is fresh off a successful $28 billion sale in 2-year U.S. Treasury notes. The market is expected to see another sale, set for $29 billion worth of 7-year notes, this Wednesday.