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TREASURIES-Bonds tumble after poor 30-year debt auction
December 10, 2009 / 6:45 PM / 8 years ago

TREASURIES-Bonds tumble after poor 30-year debt auction

* Bonds down sharply

* Treasury’s $13 billion 30-yr debt auction goes poorly (Updates after auction, adds quote, background)

NEW YORK, Dec 10 (Reuters) - U.S. Treasury debt prices tumbled on Thursday, sending 30-year yields to four-month highs after a poorly bid long-bond auction, which could revive worries over funding the huge federal budget deficit.

The government sold $13 billion of 30-year bonds in an auction that was weak on all measures and suffered from its year-end timing when many financial market professionals are reluctant to commit funds for such long-term investments.

The 30-year auction ended this week’s three offerings totaling $74 billion. Though that’s below the weekly record of $123 billion set in October, it is a lot of debt to sell in a traditionally quiet time of the year.

“This was a sloppy reception to the long end of the curve, largely driven by the lack of players at year-end,” said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.

The 30-year long bond US30YT=RR fell rapidly after the auction, pushing yields up as far as 4.51 percent, their highest since August.

They were last down a point, yielding 4.48 percent.

Though analysts blamed seasonal factors for the poor results, given that many money managers focus on bookkeeping and window dressing this time of year, it could leave the market jittery going into the new year.

The burgeoning U.S. national debt has placed extraordinary focus on bond auctions this year, especially after investors appeared to question the longevity of the United States’ prized AAA rating for a brief time back in May.

Government borrowing shot higher this year as Washington paid for bailouts of the financial sector and measures aimed at stimulating the economy amid the worst recession in seven decades. (Reporting by Burton Frierson and Richard Leong; Editing by Kenneth Barry)

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