By Sam Goldfarb

U.S. government bonds pulled back Thursday as investors prepared for a jumbo bond offering from AT&T Inc. and the last of this week's Treasury note auctions.

In recent trading, the yield on the 10-year Treasury note was 2.310%, according to Tradeweb, compared with 2.285% Wednesday. Yields rise when bond prices fall.

AT&T is poised Thursday to sell around $15 billion to $20 billion of bonds to help fund its pending acquisition of Time Warner Inc., investors said. That would make it either the largest or second-largest U.S. corporate bond deal of the year, depending on whether it exceeds the $17 billion of bonds sold by Microsoft Corp. in January, according to Dealogic.

Underwriters typically sell Treasury debt to neutralize unwanted swings in interest rates in the lead-up to corporate bond deals before buying Treasurys again when the deal are completed.

Corporate bonds also offer more attractive yields compared with government bonds, which entice buyers in a low-yield environment.

Adding to the pressure on government bonds, a $28 billion auction of seven-year Treasury notes is scheduled for Thursday, following sales of two-year and five-year notes earlier in the week.

Fresh data also showed that sales of durable goods rose in June at the quickest pace in nearly three years, providing a relatively upbeat assessment of the economy a day before investors get their first reading on second-quarter economic growth.

AT&T's offering is "a big deal, but we also got better-than-expected durable goods numbers this morning." said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. "That combination is weighing on the market."

Thursday's move added to a choppy run of trading sessions for Treasurys, which sold off to start the week before rallying Wednesday in the aftermath of the Federal Reserve's latest policy statement.

Investors and analysts said the statement generally offered few surprises, leaving the door open to another interest-rate increase this year but not committing to one. That boosted the appeal of Treasurys, which generally benefit from looser monetary policy.

Write to Sam Goldfarb at sam.goldfarb@wsj.com

(END) Dow Jones Newswires

July 27, 2017 10:26 ET (14:26 GMT)

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