Treasurys tumble as investors clamor for stocks

AP News
Posted: Dec 01, 2009 5:59 PM

Investors dumped Treasurys Tuesday, opting for riskier assets like stocks and commodities as the dollar weakened.

In late trading, the price on the 10-year Treasury fell 23/32 to 100 24/32. Its yield, considered a benchmark for many consumer loans, rose to 3.29 percent from 3.20 percent late Monday.

Trading on Tuesday resumed a familiar pattern where investors sold traditional safe-haven investments like the dollar and Treasurys and bought stocks and commodities. A string of mostly upbeat economic reports and easing concerns over financial troubles in Dubai rejuvenated investors who had fled risky assets late last week.

All major stock indexes rose more than 1 percent, including the Dow Jones industrial average, which gained 126 points and traded above 10,500 for the first time since October 2008.

Investors were encouraged by reports showing a rise in manufacturing orders and construction spending. And in the latest sign of improvement in the housing industry, the National Association of Realtors said its index of home sales agreements rose in October to the highest level since March 2006.

Word that Dubai has started negotiations with creditors on restructuring some of its debt also encouraged investors to move back into stocks and commodities.

Treasury prices got a big boost late last week as concerns about financial trouble in Dubai drove investors to safe harbors. Investors feared that the global economic recovery could be put in jeopardy after Dubai World, the government investment arm of the wealthy Middle Eastern city-state, said it was seeking to delay payments on its debt.

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In other trading Tuesday, the price of the two-year note slipped 1/32 to 100 4/32. Its yield rose to 0.68 percent from 0.67 percent.

The price of the 30-year bond tumbled 1 12/32 to 101 21/32. Its yield rose to 4.28 percent from 4.20 percent.

The yield on the three-month T-bill fell to 0.04 percent from 0.05 percent. Its discount rate was 0.05 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 _ slid to 0.2553 percent from 0.2566 percent.