(Recasts with latest market move; adds auction details, updates
* Treasury sees weak demand for $12 bln 30-yr auction
* Corporate supply adds to market pressure, hurting yields
* BOJ policy adds to yield curve steepening
By Karen Brettell
NEW YORK, Sept 13 Long-dated Treasury yields
rose to their highest levels in around three months on Tuesday
on heavy Treasury and corporate debt supply and on concerns
about global central bank policy.
The Treasury Department saw weak demand for a $12 billion
sale of 30-year bonds, the final sale of $56 billion this week
in coupon-bearing supply. The bonds sold at a high yield of
2.475 percent, above where they traded before the auction.
Companies including Cisco Systems and Deutsche
Telekom International Finance were also in the market
with multi-billion dollar deals, according to IFR.
"There's been a lot of supply today, both U.S. Treasuries
and corporate, and that's one reason why the market sold off,"
said Dan Mulholland, head of Treasuries trading at Credit
Agricole in New York.
Concerns about international central bank policy also
continued to pressure long-term debt.
Long bonds have underperformed in the past month in line
with a steepening yield curve in Japanese government bonds. The
Bank of Japan is studying options to steepen the yield curve to
help prompt new lending by banks that have been hurt by low
The yield curve also steepened on reports on Tuesday that
the BOJ plans to make negative interest rates a centerpiece of
its future easing program.
"That's lent a little bit of a steepening bias to the
curve," said Mulholland.
Benchmark 10-year notes fell 18/32 in price to
yield 1.73 percent, after rising as high as 1.752 percent, the
highest since June 3. Thirty-year bonds dropped
1-16/32 in price to yield 2.468, after earlier climbing to 2.488
percent, the highest since June 23.
The gap between two-year note and 30-year bond yields
widened to 168 basis points, the steepest since
July 1, while the difference between five-year note yields and
30-year bond yields increased to 123 basis
points, the steepest since Aug. 5.
U.S. retail sales data on Thursday and consumer inflation
data on Friday will be watched for signs of when the Federal
Reserve is likely to raise rates.
Dovish comments by Fed Governor Lael Brainard on Monday
further reduced expectations that the central bank will raise
interest rates when it meets next week.
"Even if September is off the table, CPI and retail sales
could still muddy the waters a little bit as we look ahead to
the November and December meetings," said Ian Lyngen, an
independent Treasuries strategist in New York.
(Editing by Bill Trott and Dan Grebler)