The longest decline in Treasuries this year has left U.S. government debt the cheapest since March 2011 when measured by real yields and the best relative value compared with German bunds in more than two decades.
Fannie Mae, the mortgage-financier seized by U.S. regulators in 2008, will pay the Treasury Department $59.4 billion after reporting a record quarterly profit driven by rising home prices and declining delinquencies.
Treasury 10-year note yields traded at almost the lowest level this year as the U.S. prepared to sell $35 billion in two-year debt tomorrow, the first of three note auctions this week totaling $99 billion.
A decline in the amount of Treasuries offered for sale to the Federal Reserve compared with the amount bought by the central bank should help support prices for U.S. government debt, according to FTN Financial.
The yield difference between Treasury 10-year and 30-year debt has narrowed to almost the least since November after a smaller-than-forecast job gain in March indicated the Federal Reserve will keep purchasing debt to spur the economy.