Investors buy fewest U.S. 30-year bonds at auction since September

NEW YORK (Reuters) – Fund managers purchased the least amount of U.S. 30-year Treasury bonds at an auction in 10 months earlier this month that intensified a sell-off in the bond market, according to data released from the U.S. Treasury Department on Monday.

The Treasury awarded investment managers $8.968 billion out of the $16 billion in 30-year government bonds it offered on July 11. This was the smallest allotment of this bond maturity to this group of investors since the $8.946 billion last September.

At the prior 30-year sale in June, fund managers were allotted $10.920 billion.

This most recent 30-year bond auction fetched a bid-to-cover ratio of 2.13, the weakest reading for this measure of overall auction demand since November.

The yield on the latest 30-year supply cleared at 2.644%, which was more than 2 basis points higher than what traders had expected.

Earlier that day, longer-dated Treasury yields were already climbing in reaction to a Labor Department report that showed underlying consumer prices posted their biggest gain in 1-1/2 years in June.

The weak 30-year bond auction ratcheted up the bond market sell-off. It propelled 30-year yields on the open market nearly 7 basis points higher on July 11 to 2.639%, which was their highest level in six weeks.

While fund managers purchased less 30-year bond supply, overseas accounts picked up their purchases to $1.369 billion, their highest since March, from $960 million the month before.

The Treasury awarded bond dealers $5.615 billion in 30-year bond supply, up from $4.052 billion in June.

Reporting by Richard Leong; Editing by Lisa Shumaker

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