Treasurys jump after strong 10-year auction

NEW YORK — Long-term Treasury prices surged Wednesday after strong results from an auction of 10-year notes.

Investors looking for the safety of government debt rushed to buy $19 billion in notes sold by the Treasury Department.

The auction’s bid-to-cover ratio, a measure of demand, jumped to 3.28 from 2.62 at an auction in June.

The benchmark 10-year Treasury note rose 1 9/32 to 98 15/32, sending its yield down to 3.31 percent from 3.46 percent late Tuesday. It was the yield’s lowest level since May 20. The 10-year yield hit an eight-month high of 4.01 percent on June 11.

The drop in yields is good news for borrowers because yields of long-term Treasurys are tied to interest rates on mortgages and other consumer loans.

The 30-year bond jumped 2 4/32 to 101 3/32 and its yield tumbled to 4.18 percent from 4.31 percent.

Stocks pulled off their lows after the clamoring for government debt eased fears that Washington would have to offer more enticing interest rates to attract buyers.

The government has been selling record amounts of IOUs as it tries to pump up the economy and stabilize the financial system. Investors are worried that a rise in rates would cut off a recovery in the economy by driving up borrowing costs.

But the auction results Wednesday sent prices surging. Treasury prices fell in June as investors worried that the government would run low on buyers.

In other trading, the two-year note rose 3/32 to 100 13/32 and its yield fell to 0.92 percent from 0.98 percent.

The yield on the three-month T-bill rose to 0.19 percent from 0.17 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 0.01 of a percentage point to 0.53 percent.