Treasuries Curve Flattens as 30-Year Auction Sees Higher Demand

(Bloomberg) -- Long-dated Treasuries outperformed as demand rebounded at Tuesday’s 30-year auction, while yields on shorter maturities were steady as traders waited for the Federal Reserve’s decision, with economists expecting the first interest-rate increase in a year.

The gap between five- and 30-year yields narrowed after the $12 billion auction, at which a gauge of demand known as the bid-to-cover ratio rose from a nine-month low. Investors are also looking to policy makers’ release Wednesday of new forecasts for interest rates and economic growth.

• Auction may have benefited from late concession heading into the 1 p.m. bidding deadline
• Treasury 10-year yield was little changed at 2.47 percent after trading Monday at highest level since September 2014
• Flattening between five, 30-year yields comes as German and other euro-zone curve spreads narrowed from multi-month highs reached following Dec. 8 ECB meeting
• 3-month Libor at 0.96344 percent, new multi-year high