(Bloomberg) — US bonds rallied Wednesday, dragging down yields to levels not seen in months, as strong demand for an auction suggested that investors are confident inflation will keep decelerating.
Rates on five- to 30-year Treasuries declined by at least 10 basis points on the day, after an auction of five-year notes fared better than expected. The $58 billion sale was awarded at 3.801% — the lowest since May — after trading at 3.815% immediately prior to the auction, and mostly in excess of 3.86% since the sale was announced last week. Yields on 10-year Treasuries slumped to 3.79%, a rate last seen in July.
An auction of two-year notes on Tuesday also drew a below-anticipated yield, indicating that investors were willing to settle for more modest returns. The Treasury market is on course for a second-straight steep monthly gain, fueled by evidence that inflation is on a path toward the central bank’s target after two years of…
