Treasurys edge higher as stock rally slows

NEW YORK — Treasurys edged higher Friday as investors sold off stocks amid renewed caution after a five-month rally.

Bond trading was relatively quiet this week as traders balanced good signs of demand at Treasury auctions with mixed signals about the strength of the economy.

In late trading, the 10-year note rose 2/32 to 101 16/32 and its yield fell to 3.45 percent from 3.46 percent late Thursday.

Consistent buying of Treasurys at this week’s auctions helped lift bond prices and allay concerns that the large amount of debt being issued by the government to finance its stimulus programs would overwhelm the market.

Investors had been selling off bonds during a rally this summer in the stock market as their appetite for risk increased. That trend has eased in recent days as the stock market seemed to reach a plateau.

On Friday, the Dow Jones industrial average slipped 36 points, or 0.4 percent, while the broader Standard & Poor’s 500 index fell 0.2 percent. For the week, the Dow gained 38 points and other major indexes also posted modest moves.

The 30-year bond rose 15/32 to 105 3/32, and its yield fell to 4.20 percent from 4.23 percent.

In other trading, the two-year note rose 2/32 to 99 31/32. Its yield fell to 1.02 percent from 1.05 percent.

The five-year note rose 4/32 to 99 21/32, while its yield fell to 2.45 percent from 2.48 percent.

The government successfully auctioned $42 billion of two-year notes and $39 billion of five-year notes during the week. It also sold $28 billion in seven-year notes, which were only recently reintroduced to help finance the government’s economic stimulus programs.

The price of seven-year notes rose 8/32 to 99 14/32. Its yield dropped to 3.09 percent from 3.13 percent.

The yield on the three-month T-bill fell to 0.13 percent from 0.14 percent. Its discount rate was 0.14 percent.

The cost of borrowing between banks fell. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — fell to 0.35 percent from 0.36 percent.