-->Treasuries Lower Following 'Ugly' Auction
Thu Sep 9, 2004 02:12 PM ET


MORE

By Wayne Cole
NEW YORK (Reuters) - Treasuries prices turned lower in choppy trade on Thursday as an auction of U.S. government debt drew almost no private demand, leaving the dealer community holding a pile of paper.

"It was an extremely ugly auction. And that's something nobody wants to see, not the Street and certainly not Treasury given the amount of borrowing they have to do," said Sadakichi Robbins, head of global fixed-income trading at Bank Julius Baer.

The sale of $9 billion in reopened 10-year Treasury notes went at a high yield of 4.195 percent, well above expectations, and drew bids for only 2.12 times the amount on offer, down from August's 2.90 level.

The current 10-year note (US10YT=RR: Quote, Profile, Research) shed 6/32 in price, lifting its yield to 4.19 percent from 4.16 percent on Wednesday. In when-issued trading, yields on the new 10-year paper had hovered around 4.17 percent before the sale.

Indirect bidders, including customers of primary dealers and foreign central banks, picked up only 2.8 percent of the issue. That compares to 54 percent in the original sale of the notes and 38 percent at the last reopening