T-bond yields end a two-week run-up

The jump in interest rates on U.S. Treasury bonds in the last two weeks may have run its course -- which would be good news for people in the market for a home loan.

Yields on Treasury issues fell across the board Wednesday after the government saw robust demand at its sale of $21 billion in 10-year notes.

The notes were sold at a yield of 3.9%. The Treasury got bids totaling $78 billion for the securities, the largest amount of orders relative to the size of a 10-year offering since at least 1994, according to Bloomberg News data.

The recent rise in market yields -- which pushed the 10-year T-note to a 17-month high of 3.99% on Monday from 3.66% on March 22 -- was enough to pull investors in from the sidelines, traders said.

“Retail and institutional investors drew a line in the sand at 4%” on the 10-year note, said Tom Di Galoma, head of fixed-income rates trading at Guggenheim Capital Markets in New York.

The Treasury will auction $13 billion of 30-year bonds Thursday.

Falling government bond yields will help remove some of the upward pressure on mortgage rates, which tend to follow the trends in Treasury yields.

The bond market turned dicey two weeks ago after demand was weaker than expected at an auction of new five-year and seven-year T-notes. Those auctions raised fears that investors were beginning to choke on the supply of Treasury debt, which has grown sharply as the federal government has funded its ballooning budget deficit.

Expectations of higher interest rates also were stoked by last week’s employment report showing that the number of jobs grew in March by the largest amount in three years.

But Wednesday’s auction demonstrates that many investors still are happy to take Uncle Sam’s bonds, even at historically low interest rates.

Traders said demand at the auction probably got a boost from investors retreating from European government debt because of renewed jitters about Greece’s debt woes. The yield on 10-year Greek government bonds soared Wednesday to 7.17%, up from 6.98% on Tuesday and the highest in more than a decade, after Greek banks asked the country’s cash-strapped government for more financial help.

tom.petruno@latimes.com