Treasuries suffered their biggest two-day tumble in six weeks as an unexpected jump in durable-goods orders and a recovery in stocks suppressed demand.
Losses deepened after an auction of five-year Treasuries drew the least interest since 2009, signaling that investors’ safe-haven appetite may have waned.
Debt found only temporary support after Federal Reserve Bank of New York President William Dudley said the case for increasing interest rates in September is less compelling because of worldwide market turmoil. Buyers demurred without evidence that the turbulence will slow the U.S. economy.
“There’s still too many distortions lingering from the last four or five days” to figure out the direction for Treasuries, said Jim Vogel, an interest-rate strategist with FTN Financial in Memphis, Tennessee. Consumer confidence data in coming days will give the first glimpse of whether the economy is feeling the pinch from the volatility, he said.
The benchmark U.S. 10-year note yield rose 10 basis points, or 0.1 percentage point, to 2.18 percent as of 4:59 p.m. in New York, according to Bloomberg Bond Trader data. The 2 percent security due in August 2025 dropped about 7/8, or $8.75 per $1,000 face value, to 98 13/32.
Yields on 10- and 30-year Treasury yields rose by a combined 17 basis points and 20 basis points over the past two days, respectively, their steepest increase since July 9-10.
Traders latched onto signs of economic strength in early New York trading. Orders for all durable goods — items meant to last at least three years — rose 2 percent, exceeding all forecasts of economists surveyed by Bloomberg, data from the Commerce Department showed.
The freshest look at consumer confidence comes Aug. 28, with the University of Michigan consumer sentiment index for August. The measure probably improved to 93 from a preliminary reading of 92.9, according to the median forecast in a Bloomberg survey.
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