Treasury prices decline as investors bid up stocks
NEW YORK — Treasury prices fell Tuesday, pushing their yields higher, as investors poured money into riskier investments such as stocks.
An auction of three-year notes helped push prices off their lows of the day.
The price of the benchmark 10-year Treasury note fell 9/32 to 103 1/32. Its yield rose to 3.26 percent from 3.23 percent late Monday. The yield on the 10-year note is closely tied to interest rates on consumer loans.
Investors rushed into stocks Tuesday for the second straight day at the expense of safer investments like government debt. Major indexes all jumped more than 1 percent as investors welcomed the latest signs of a potential global economic recovery.
The Australian central bank raised its key interest rate, helping bolster hopes of a rebound. The bank’s governor said the worst of the crisis was over and it was time to start reducing the economic stimulus provided by low interest rates.
At the same time, raising rates in other countries can put pressure on U.S. Treasurys since their lower interest rates would be less attractive to bond investors compared with foreign debt.
An auction of three-year Treasury notes helped push prices off their lows Tuesday afternoon. The government sold $39 billion of the notes.
The bid-to-cover ratio, a measure of demand, was 2.76, below the 3.02 ratio when the government sold notes of the same maturity last month.
Demand has been a long-term concern for investors who worry the government’s unprecedented spending programs to help stimulate the economy could saturate the bond market. That would force the Treasury Department to increase yields to attract bidders, which would send prices lower.
The price of the three-year note fell 2/32 to 99 31/32, pushing its yield to 1.39 percent from 1.36 percent.
In other trading, the price of the 30-year bond fell 29/32 to 107 13/32, while its yield rose to 4.07 percent from 4.02 percent.
The price of the two-year note fell 2/32 to 100 5/32 and its yield rose to 0.91 percent from 0.88 percent.
The yield on the three-month T-bill slipped to 0.06 percent from 0.07 percent and its discount rate stood at 0.07 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.
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