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UPDATE 1-U.S. November Treasury refunding ends with weak 30-year bond sale
November 10, 2016 / 8:50 PM / a year ago

UPDATE 1-U.S. November Treasury refunding ends with weak 30-year bond sale

* Bid-to-cover ratio at 30-year sale lowest since February

* U.S. 30-year yield reaches highest yield in 10 months

* Trump’s economic views raise inflation worries (Adds background, quote)

NEW YORK, Nov 10 (Reuters) - A weak auction of $15 billion in 30-year bonds on Thursday ended the U.S. government’s November debt refunding as Donald Trump’s surprise win in the U.S. presidential election stoked bets on rising inflation.

The 30-year government debt sale marked the final leg of the quarterly refunding, which had already seen a poor reception for $24 billion of three-year notes and $23 billion of 10-year debt earlier this week.

Trump, who beat Democratic nominee Hillary Clinton, campaigned on tax cuts, immigration restriction and infrastructure spending, which traders worry would balloon the federal deficit and stoke inflation. It remains to be seen how these views would shape into laws and how they affect the economy, analysts said.

Still the steep bond market sell-off since late Tuesday and this week’s soft auction demand suggested bond investors are nervous about the inflationary impact.

“People are just deciding to wait and see,” said Gemma Wright-Casparius, senior portfolio manager at Vanguard in Malvern, Pennsylvania.

The ratio of bids to the amount of 30-year bonds offered , which gauges overall demand at an auction, was 2.11, which was the lowest since February, Treasury data showed.

The latest 30-year issue was sold at a yield of 2.902 percent, the highest since January.

Indirect bidders which include fund managers and foreign central banks bought 54.54 percent of Thursday’s 30-year offering, which was their smallest award since August 2015, according to Treasury data.

On the open market, the 30-year bond lost 1-18/32 in price for a yield of 2.944 percent, up over 8 basis points on the day. The 30-year yield reached 2.948 percent earlier Thursday, which was its highest in 10 months, Reuters data showed. (Reporting by Richard Leong; Editing by Chris Reese and Chizu Nomiyama)

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