The U.S. Treasury’s latest auction saw relatively weak demand Tuesday, with prices edging lower and interest rates moving higher.
“Overall bidding at the $31 billion U.S. Treasury three-year note auction on Tuesday fell to its lowest since November with the yield coming in at 2.664 percent, the highest yield at a three-year auction in 11 years,” Reuters reported.
Peter Boockvar, chief investment officer at Bleakley Advisory Group, wrote to clients Tuesday, “Again, we have another US Treasury auction that garners lame demand,” despite an 11-year high in yields. Boockvar cited three possible reasons for the poor performance:
1) rising inflation expectations,
2) a big increase in supply due to rising deficits,
3) trade conflicts reducing interest from investors overseas.
MarketWatch’s Sunny Oh added a fourth potential factor: Driven by political concerns, traders were unloading Italian debt on Tuesday, and the selling pressure may have spilled over into the American market.