Treasury prices rise after latest debt auction

NEW YORK — Treasury prices recovered Wednesday, bouncing back from declines a day earlier, following strong demand at the government’s latest debt auction.

Investors welcomed new 10-year Treasury notes to the market, again putting aside long-term fears of inflation and over-saturation of the government debt market.

The Treasury Department auctioned $20 billion in 10-year notes to solid demand. The bid-to-cover ratio was 3.01, stronger than the 2.77 ratio of notes with a similar maturity auctioned last month.

In late trading, the price of the benchmark 10-year Treasury note rose 19/32 to 103 21/32. Its yield fell to 3.19 percent from 3.26 percent late Tuesday.

Analysts have been worried that the government’s massive spending program to help stimulate the economy would eventually overwhelm demand for new debt. That, in turn, would force the Treasury Department to raise the yield on bonds to make them more attractive, putting pressure on their prices.

The 30-year bond rose 1 4/32 to 108 17/32, while its yield fell to 4.01 percent from 4.07 percent.

The two-year note rose 3/32 to 100 8/32 and its yield fell to 0.87 percent from 0.91 percent.

The yield on the three-month T-bill fell to 0.05 percent from 0.06 percent. Its discount rate was 0.06 percent.

The cost of borrowing between banks remained unchanged. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — was flat at 0.28 percent.