Treasurys little changed ahead of auctions
NEW YORK — Treasury prices were little changed Friday as investors refrained from making big moves ahead of another round of auctions.
The Treasury Department will issue $205 billion of debt next week, including $115 billion in two, five and seven-year notes and $90 billion of three and six-month and one-year bills.
Treasury auctions have been a point of worry for investors this year. The fear is that demand for government debt will weaken, considering the vast of amounts the Treasury is issuing to help fund the Obama administration’s stimulus programs.
If that happened, the government would be forced to increase returns on the bonds it offers to sweeten the deal and entice buyers, subsequently hiking up borrowing costs for consumers and possibly even stifling the economy’s recovery.
Yields on long-term Treasurys are closely linked to interest rates on mortgages and other consumer loans. Access to cheap debt is an important element in reviving consumer spending, which accounts for more than two-thirds of U.S. economic activity.
So far, auctions have been met with decent demand, but the Treasury market could come under pressure if auctions were to go badly, analysts say.
In late trading, the benchmark 10-year Treasury note rose 1/32 to 95 19/32. Its yield slipped to 3.66 percent from 3.67 percent late Thursday.
The 30-year bond rose 6/32 to 95 7/32, and its yield fell to 4.54 percent from 4.55 percent.
The two-year note rose 1/32 to 100 7/32, while its yield fell to 1.01 from 1.02 percent.
The yield on the three-month T-bill inched up to 0.18 percent from 0.17 percent. Its discount rate was 0.19 percent.
Treasurys have had a rocky couple of days. They rose earlier in the week as Federal Reserve Chairman Ben Bernanke knocked down fears of rising inflation, which hurts bonds by eating into their fixed returns.
In the latter half of the week, though, prices came under pressure as stocks soared on upbeat earnings reports and signs of stabilization in the housing market. Demand for the safety of government debt tends to wane when investors’ appetite for risk increases.
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