The 30-year yield eases from a 2002 high as Treasury's sale week begins

The interest rate on 30-year US government debt eased to 5.626% before the US session opened, down from 5.702%, on Monday, its highest level since 2002. The iShares 20+ Year Treasury Bond ETF TLT, which holds long-term US government bonds, was predicted to climb 0.6% higher.

The US Treasury will sell $119 billion of notes and bonds over the next three days. Today it is $58 billion of 3-year notes. Wednesday it is $39 billion more of an existing 10-year note, and Thursday $22 billion more of an existing 30-year bond.

Last month, on Tuesday, September 8, buyers of the 3-year note were awarded a yield of 4.474%, up from 4.291% in the previous month's auction and the highest level since 2024. Buyers showed strong appetite, however, with bids 2.72 times the notes on offer.

Japan's government bond sale foreshadowed this result. During the Asian trading session, Japan's Ministry of Finance set the coupon on a new 10-year bond at 3.1%, the first time the rate on these instruments had topped 3% since August 1996. The sale cleared at a yield of 3.103%.

Buyers bid 3.76 times the amount of notes awarded, above an excess of 3.29 times at the previous sale, and an average of 3.21 times over the past year.

Oil followed the 30-year US Treasury yield lower on Tuesday morning. West Texas Intermediate, the main US oil price, was at $87.45 a barrel at 6:52 a.m. Eastern time, down 2.2% on the previous day's close. The United States Oil Fund USO, which holds oil futures, was predicted to decline 1.9%, a smaller move than the oil price. On Friday, G7 nations including France and Germany agreed to release 100 million barrels of diesel and crude from emergency stocks.

The SPDR S&P 500 ETF SPY, which tracks the S&P 500 index of the US's biggest companies, was showing a 0.3% gain before the US market open. On Monday, the Nasdaq Composite index rose 1.1% to a record close of 27,490.15, the same day the 30-year yield touched its record high.

Eric Diton, president and managing director at The Wealth Alliance, said the Nasdaq "is being driven by a handful of the largest stocks: Nvidia, Microsoft, Meta and Tesla."

The minutes of the US Federal Reserve's September meeting are due Wednesday, when 10-year Treasury notes go on sale, with any hint that the Fed is planning a prolonged campaign of interest rate hikes likely to concern investors.

The result of today's 3-year note auction is the one to watch, however, set against the 4.474% yield achieved on these bonds in September when bids exceeded supply by 2.72 times.