Bond market perks up following a weak close to '09

AP News
Posted: Jan 04, 2010 5:45 PM

Long-term borrowing costs mostly fell Monday as investors put more money into the Treasury market following a weak end to 2009.

The yield on the 10-year Treasury note, which is closely linked to interest rates on mortgages and other consumer loans, fell to 3.83 percent in late trading Monday from 3.84 percent Thursday, while its price rose 3/32 to 96 10/32.

It was the first day of trading in 2010 since markets were closed Friday for the New Year's holiday.

"Today is back-in-the-saddle day," said Howard Simons, strategist with Bianco Research in Chicago.

Bond yields had edged higher toward the end of 2009 as Treasury prices slumped, which may have drawn in more buyers Monday. Simons said the selling could resume once trading gets under way in earnest in 2010.

"There were just no sellers today," Simons said. "They'd already sold."

The 30-year bond, which is more vulnerable to inflation, was the exception to the upswing in Treasurys as several signs of rebounding manufacturing activity around the world spurred a global stock rally. The Dow Jones industrial average rose 156 points, or 1.5 percent.

The yield of the 30-year bond edged up to 4.65 percent from 4.63 percent, while its price fell 6/32 to 96 12/32.

In other trading, the price of the two-year Treasury note rose 4/32 to 99 27/32, sending its yield down to 1.08 percent from 1.15 percent Thursday.

The yield on the three-month T-bill rose to 0.07 percent from 0.05 percent. Its discount rate was 0.08 percent.