U.S. Treasuries rallied Thursday with the run up sparked by a steep decline in China’s export numbers overnight which renewed concerns over global growth. The two- and five-years have traded to the overnight low yield/high price levels while the longer end has made a few attempts to reach those levels. The holiday-shortened week has seen middling results for Treasury supply thus far and the long-dated 30-year may face tepid interest from foreign buyers.

The 30-year recently was near 2.474%, from a high at 2.452% overnight and 2.508% close Wednesday. The 10-year is near 1.745% from 1.7265% and a 1.778% close. The five-year is leading the rally, trading near 1.268% from an early 1.2553% and 1.3005% Wednesday. The two-year is near 0.847% from a 0.8304% high and 0.87% close.

The curve trade has also reversed the week sell off, tightening to a flatter slope with the yield spread between the two- and 10-years near 89 plus form a close just inside 91 while the the five- and 30-year yield gap has narrowed to 1.20 plus from near 1.21.

CME Group fed fund futures have discounted the odds of a rate increase at the Nov 2 meeting while trimming the chances of a mid-December hike to near 65.5% from near 70%.

The $12 billion reopened 30-year bond auction is being viewed with caution even as yields are running near the highest levels since June. Traders note competition from a batch of new issues may dampen interest in the sale. The 30-year offerings have seen falling foreign participation rates over the past 3 sales with the September sale seeing the lowest level since January while overall demand was the weakest since February.

The previous $12 reopened 30-year sale saw buyers requiring a higher yield, with the issue tailing to a 2.475% rate versus 2.465% at the bid deadline and a 2.274% August award rate. Buyers ponied-up just $2.13 for each $1 on offer, missing the previous $2.24 last an an average $2.36. Indirect bidders, the proxy for official foreign interest, took just 57.9% from the prior 61.5% and an average 61.8%. Direct bidders took 4.6%, less than half of August’s 10.9%, while primary dealers, those banks required to bid at auctions were left to pick-up 37.5%, up from 27.7%.

New issues on tap include the Kingdom of Sweden’s $3 billion three-year. The Export Import Bank of Korea is selling benchmark-sized three-year fixed and floating-rate notes (FRN) as well as a five- and 10.5-year notes. CSX Corp has a benchmark 10-year, 30-year and 50-year offering (now that its earnings are out of the way). Toyota Motor Credit has a benchmark three-year fixed and FRN along with a seven-year. Ecolab Inc plans a 10- and 30-year deal. Global Bank Corp is selling 5-year notes.

The data showed initial weekly jobless claims held near a four-decade low, beating expectations. Import prices were in line at 01% while exports rose at a 0.3% rate versus the 0.1% expected.

Data still on deck includes the September Treasury Budget at 2 p.m. ET.

Treasury plans to auction $42 billion three- and $36 billion six-month bills Monday with $5 billion reopened 30-year Treasury Inflation Protected (TIPS) on sale next Thursday. The reopened 30-year bond sale is set for 1 p.m.

Philadelphia Fed President Patrick Harker speaks on the economic outlook at 12:15 p.m. and Minneapolis’ Neel Kashkari talks at 9 p.m.

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