May 9 (Bloomberg) -- The Treasury market’s yield curve steepened this week by the most in almost eight months after Federal Reserve Chair Janet Yellen eased investor concern that policy makers would accelerate interest-rate increases.
Five-year notes, more susceptible to changes in Fed rate policy expectations, outperformed 30-year bonds after Yellen told Congress yesterday rates are unlikely to rise unless the recovery is stronger. U.S. job openings fell in March, a report today showed. Demand for Treasuries at this week’s note and bond auctions fell to the weakest level in seven months on bets a rally may have gone too far, too fast.
Five-year notes, more susceptible to changes in Fed rate policy expectations, outperformed 30-year bonds after Yellen told Congress yesterday rates are unlikely to rise unless the recovery is stronger. U.S. job openings fell in March, a report today showed. Demand for Treasuries at this week’s note and bond auctions fell to the weakest level in seven months on bets a rally may have gone too far, too fast.
“It’s the front end coming down,” said Adrian Miller, director of fixed-income strategies at GMP Securities LLC in New York. Yellen “moved the needle for when rates rise to the back half of 2015. She confirmed her dovish bias. Look for a narrow trading range in the longer end of the curve.”
The yield on the five-year note was little changed at 1.63 percent at 5 p.m. in New York, according to Bloomberg Bond Trader prices. It fell three basis points, or 0.03 percentage point, on the week. The price of the 1.625 percent security due in April 2019 was 99 31/32.
The 30-year bond yield increased one basis point to 3.46 percent, rising 10 basis points on the week. It dropped to 3.35 percent on May 5, the lowest since June 19. Ten-year note yields were little changed at 2.62 percent, a four basis-point advance on the week.
The gap between yields on five- and 30-year Treasuries widened 13 basis points on the week to 1.83 percentage points. It was the first increase in four weeks and the biggest since the five days ended Sept. 20.
Treasury Gains
The Bloomberg U.S. Treasury Bond Index gained 0.6 percent in April and 2.68 percent this year, after losing 3.4 percent last year. It rose 0.3 percent this month through yesterday.
The $69 billion of three-, 10- and 30-year debt sold by the Treasury this week attracted the lowest demand for the monthly series of auctions of the maturities since October. The ratio of bids to debt sold was 2.83 times, compared with 2.99 times in April.
Hedge-fund managers and other large speculators increased their net-long position in 30-year bond futures to the most since Feb. 28 in the week ending May 6, according to U.S. Commodity Futures Trading Commission data.
Speculative long positions, or bets prices will rise, outnumbered short positions by 35,677 contracts on the Chicago Board of Trade. They rose by 3,468 contracts, or 11 percent, from a week earlier, the Washington-based commission said in its Commitments of Traders report.
