Treasurys mostly decline after inflation data

AP News
Posted: Nov 18, 2009 5:10 PM

Treasury prices mostly fell Wednesday after a new report showed inflation rose slightly more than expected last month.

In late trading, the price on the 10-year note fell 10/32 to 100 2/32. Its yield, which is often used as a benchmark for interest rates on consumer loans, rose to 3.37 percent from 3.33 percent late Tuesday.

Long-term Treasurys fell slightly as the Labor Department said prices at the retail level rose 0.3 percent in October, above the 0.2 percent forecast by economists polled by Thomson Reuters. Core inflation, which excludes volatile energy and food prices, rose 0.2 percent, compared with expectations for a 0.1 percent increase.

Investors have been closely monitoring economic reports for any signs of potential inflation, which would hurt the value of fixed-income investments like bonds. There has been concern that inflation could eventually become a problem because of the unprecedented spending by the government to stimulate the economy.

Most recent data though suggest inflation remains at bay, and Federal Reserve chairman Ben Bernanke on Monday reassured markets that inflation won't surface in the near future.

In other trading, the price on the 30-year bond fell 25/32 to 101 5/32, pushing its yield up to 4.31 percent from 4.26 percent.

The price of the two-year note rose 1/32 to 100 15/32, while its yield fell to 0.75 percent from 0.77 percent.

The yield on the three-month T-bill fell to 0.02 percent from 0.04 percent. Its discount rate was 0.03 percent.

The cost of borrowing between banks dipped. The British Bankers' Association said the rate on three-month loans in dollars _ the London Interbank Offered Rate, or Libor _ fell to 0.2691 percent from 0.2703 percent.