SymbolPriceChangeHX6.DE0.000.00{“s” : “HX6.DE”,”k” : “a00,a50,b00,b60,c10,g00,h00,l10,p20,t10,v00″,”o” : “”,”j” : “”}

NEW YORK (Xetra: A0DKRK – news) , July 26 (Reuters) – The U.S. Treasury sold $35
billion worth of two-year notes on Tuesday in an auction that
managed to overcome worries over the government’s Aug. 2
deadline to raise the debt limit.

Yields at the auction came in below expectations, based on
trading in the when-issued market at the 1 p.m. deadline for
bids, which indicates investors were not demanding an
above-market premium to take down the bonds.

However, a measure of foreign demand, indirect bids, came
in below average, suggesting foreign investors might be taking
a skeptical view of the market given the contentious debate
over the U.S. national debt.

One key support was the direct bidder category, which
includes investment funds. This group showed above-average
interest, helping the auction overall look reasonably solid.

“Given the veil of uncertainty that hangs over the Treasury
market, we see this auction as a very good result,” said
William O’Donnell, head of Treasury strategy at RBS Securities
in Stamford, Connecticut.

“Indirect bidder participation was below average again but
direct bidder participation was strong and allowed this auction
to come pretty much on the screws.”

The bond market showed little reaction to the auction and
maintained the day’s earlier gains. The benchmark 10-year note
was last trading 12/32 higher in price on the day,
yielding 2.96 percent.
(Reporting by Burton Frierson; Editing by Leslie Adler)