U.S. completes huge bond auction

The Treasury had to pay a little more than expected Thursday to sell $14 billion in 30-year bonds, the final leg of a record three-part bond sale this week to fund Uncle Sam’s soaring cash needs.

At least investors showed up to buy -- as opposed to what happened in Mexico on Wednesday: The government of President Felipe Calderon had to pull a planned sale of 21-year bonds after investors balked.

“There was no demand” for those securities, Gerardo Rodriguez, head of the Finance Ministry’s Public Credit Department in Mexico City, told Bloomberg News.

The U.S., by contrast, benefited this week from deepening fears about the economy, which drove some investors to buy Treasury bonds as a safety play, sending the bonds’ prices up and their yields down.


The new 30-year T-bonds were sold at an annualized yield of 3.54%. Traders had expected a yield of about 3.5%. Still, the market yield on the previously issued 30-year T-bond had reached 3.7% late last week -- before yields tumbled Tuesday as the stock market plunged again and more money went looking for a haven.

The 30-year bond sale followed an auction of $21 billion in 10-year T-notes on Wednesday (at a yield of 2.82%) and an auction of $32 billion of three-year T-notes on Tuesday (at 1.42%).

The total of $67 billion was a record for a sequence of longer-term bond sales.

In Mexico, the government was able to sell $1.5 billion in five-year notes Wednesday at a yield of 6.01%, even though it canceled the 21-year bond sale.

The same thing that’s keeping investors interested in U.S. bonds and in the dollar generally -- the desire for a perceived haven -- is trouble for Mexico. The peso closed Thursday at 14.5 to the dollar, near the weakest the currency has been since it was reconfigured in the early 1990s. It has plunged from 10 to the dollar in July.