Treasury yields fell on Thursday after a 30-year bond auction attracted strong demand from investors, pressuring long-dated yields.

What are yields doing?

The benchmark 10-year Treasury yield

TMUBMUSD10Y, -1.37%

fell to 2.324%, compared with 2.346% on late Wednesday. The shorter 2-year Treasury note yield

TMUBMUSD02Y, -0.79%

ticked lower to 1.509%, from 1.520%, while the 30-year bond yield

TMUBMUSD30Y, -1.20%

slipped to 2.852%, versus 2.876%. Bond prices move in the opposite direction of yields.

What drove markets?

A strong auction for $12 billion of 30-year Treasury bonds helped pull yields lower. Incoming supply of government paper can influence trading for Treasurys. A common way to track the success of the sale, the bid-to-cover ratio was 2.53, the highest since Sep. 2015. It indicates the proportion of buyers to the amount available bonds on the block.

With plenty of Fed officials going on the record, investors gleaned further clues on the path of future monetary policy in the wake of the release Wednesday of the minutes from the central bank’s September policy meeting. Former Fed Chief Ben Bernanke and Fed Gov. Lael Brainard participated in a spirited debate on the merits of price-level targeting, which argues inflation should overshoot the 2% target if prices have spent long periods below the desired rate.

See: December rate hike might not be automatic, minutes of last month’s meeting show

What are market participants saying?

“As has been the case for a while now, the auctions in the long-end present a liquidity opportunity for investors,” wrote Thomas Simons, senior money market economist for Jefferies.

What economic data is on investor’s radar?

  • Initial claims on unemployment benefits for the week ending Oct. 7 dipped 15,000 to 243,000, from 260,000 the previous week. Economists surveyed by MarketWatch were expecting a more modest fall of 10,000.
  • Wholesale prices in September jumped by 0.4%, contributing to an annual growth rate of 2.6%, the fastest pace since 2012.

What central bankers are saying?

  • Powell said emerging-market economies should be able to withstand higher U.S. rates thanks to an improvement in growth and continued capital inflows.
  • Formed Fed Chief Bernanke said the central bank could employ price-level targeting to add to the Fed’s arsenal of monetary policy tools. That means it would allow inflation to stay above 2% to “make up” for periods when inflation is too low. Fed Gov. Lael Brainard, however, said it was unclear after the Fed adopted price-level targeting, when it should return to the “standard” 2% inflation target.
  • Atlanta Fed President Raphael Bostic will talk about normalizing the balance sheet at 9:15 p.m. He will be a voting member of the central bank’s policy-making committee next year.

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