By Sunny Oh

30-year German government bond auction struggled to draw demand

U.S. Treasury yields edged higher on Wednesday as the positive tone in equity markets and a lackluster debt auction in Germany helped sap demand for U.S. government paper.

What are Treasurys doing?

The 10-year Treasury note yield rose 3 basis points to 1.589%. The 2-year note rate was up 2.7 basis points to 1.541%, while the 30-year bond yield ticked higher by 2.5 basis points to 2.068%. Debt prices move in the opposite direction of yields.

What's driving Treasurys?

Investors sold Treasurys after riskier assets looked on track to bounce back from Tuesday's loss (http://www.marketwatch.com/story/us-stock-futures-edge-lower-threaten-to-snap-dows-three-day-win-streak-2019-08-20). Futures for the S&P 500 and the Dow Jones Industrial Average were pointing to a higher open for U.S. stocks.

Germany auctioned off a batch of 30-year bonds at a record-low yield of negative 0.11% but was only able to sell EUR824 million ($915 million) of the up to EUR2 billion of debt for sale. A tepid debt sale can weigh on the broader trading for the government bond market.

The German 10-year government bond yield rose 2.6 basis points to negative 0.666%, while the 30-year bond yield traded at a negative 0.14%, Tradeweb data show.

In the afternoon, the Federal Reserve will publish the minutes of the July meeting of its Federal Open Market Committee, its rate-setting body, at 2 p.m. Eastern. Investors are hoping for additional clues on how the FOMC was split on last month's decision to lower rates by a quarter percentage point. Market participants also said they would look to the Jackson Hole Symposium starting on Friday to confirm expectations for another rate cut in September.

San Francisco Fed President Mary Day said (http://www.marketwatch.com/story/recession-not-on-horizon-feds-daly-says-2019-08-20)a recession was not on the horizon on Tuesday in written answers to questions on the Quora website.

What did market participants' say?

"The FOMC minutes are today's main event, but investors may be reluctant to respond and will hold (ample) powder in reserve for Powell's speech and more timely observations on the economy, trade tensions and inflation in Jackson Hole on Friday," wrote Kenneth Broux, a strategist at Société Générale. "Trump announced new tariffs the day after the hawkish Fed cut in July and though a part of the levies has been postponed until Christmas, Powell is still expected to endorse market pricing for another quarter point ease next month."

(END) Dow Jones Newswires

August 21, 2019 07:52 ET (11:52 GMT)

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