Treasurys Pull Back on New Debt Supply
July 27 2017 - 9:41AM
Dow Jones News
By Sam Goldfarb
U.S. government bonds pulled back Thursday as investors prepared
for a jumbo bond offering from AT&T Inc. and the last of this
week's Treasury note auctions.
In recent trading, the yield on the 10-year Treasury note was
2.310%, according to Tradeweb, compared with 2.285% Wednesday.
Yields rise when bond prices fall.
AT&T is poised Thursday to sell around $15 billion to $20
billion of bonds to help fund its pending acquisition of Time
Warner Inc., investors said. That would make it either the largest
or second-largest U.S. corporate bond deal of the year, depending
on whether it exceeds the $17 billion of bonds sold by Microsoft
Corp. in January, according to Dealogic.
Underwriters typically sell Treasury debt to neutralize unwanted
swings in interest rates in the lead-up to corporate bond deals
before buying Treasurys again when the deal are completed.
Corporate bonds also offer more attractive yields compared with
government bonds, which entice buyers in a low-yield
environment.
Adding to the pressure on government bonds, a $28 billion
auction of seven-year Treasury notes is scheduled for Thursday,
following sales of two-year and five-year notes earlier in the
week.
Fresh data also showed that sales of durable goods rose in June
at the quickest pace in nearly three years, providing a relatively
upbeat assessment of the economy a day before investors get their
first reading on second-quarter economic growth.
AT&T's offering is "a big deal, but we also got
better-than-expected durable goods numbers this morning." said
Larry Milstein, head of government and agency trading at R.W.
Pressprich & Co. "That combination is weighing on the
market."
Thursday's move added to a choppy run of trading sessions for
Treasurys, which sold off to start the week before rallying
Wednesday in the aftermath of the Federal Reserve's latest policy
statement.
Investors and analysts said the statement generally offered few
surprises, leaving the door open to another interest-rate increase
this year but not committing to one. That boosted the appeal of
Treasurys, which generally benefit from looser monetary policy.
Write to Sam Goldfarb at sam.goldfarb@wsj.com
(END) Dow Jones Newswires
July 27, 2017 10:26 ET (14:26 GMT)
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