The strong bidding from funds picked up the slack from foreign investors, including central banks, which scaled back their bids last week.
The auction data comes as Washington headed down to the wire to raise the national debt ceiling and avert a default. The Treasury has said it will be unable to avoid a default if lawmakers do not raise the debt limit by Aug. 2.
However, last week’s offerings also came before Thursday’s deal in Europe aimed at halting the Greek debt crisis and at a time when investors were concerned about a US economic slowdown, both of which favored safe-haven Treasuries.
“There was quite a bit of uncertainty on the table in the past few weeks and it seems that funds took advantage to buy in. That said, if the stronger fund participation keeps going, we could see very strong auctions in the coming week,” said Gennadiy Goldberg, fixed income analyst at 4Cast Ltd. in New York.
In total, investment funds bought $15.84 billion in Treasuries at last week’s auctions, up 73 percent from June’s auctions for these maturities, according to the US Treasury Department.
Investment funds bought $5.58 billion in three-year notes last week, up from $2.36 billion last month. They bought $5.43 billion in benchmark 10-year Treasury notes, up from $4.62 billion in June.
The funds also bought $4.83 billion in 30-year bonds, up from $2.15 billion in June.
In total, foreign investors bought $12.91 billion in new Treasuries last week, down 19.6 percent from the amount purchased in June.
Foreigners bought $6.75 billion in three-year notes last week, down from $7.92 billion in June.
They purchased $4.39 billion in 10-year notes, down from $5.86 billion last month.
Foreigners also bought $1.77 billion in 30-year bonds, down from $2.27 billion last month.
Next week’s auctions of two-, five- and seven-year debt are the last US Treasury bond offerings scheduled before Aug. 2.
Even if the US debt worries made foreigners less enthusiastic about buying Treasuries, a move by funds to stock up on more government bonds already appeared to be under way.
The manager of the world’s largest bond fund, PIMCO, said earlier this month that it had soured further on the USeconomic outlook and jacked up buying of US Treasuries in June.
