Treasury prices fall ahead of ECB meeting

AP News
Posted: Apr 06, 2011 5:37 PM
Treasury prices fall ahead of ECB meeting

Investors sold Treasurys Wednesday as inflation expectations grow a day before the European Central Bank's meeting on interest rates.

The price of the 10-year note fell 57 cents per $100 invested in late trading. Its yield, which moves in the opposite direction, rose to 3.55 percent from 3.49 percent late Tuesday.

The ECB is expected to boost its interest rate to 1.25 percent from 1 percent to curb inflation. That is in sharp contrast to the Federal Reserve's policy of keeping short-term interest rates near zero and buying government debt to keep borrowing rates low. Traders worry that rising oil prices will push inflation higher and the central bank eventually will have to raise rates.

Investors also sold Treasurys on expectations of more supply hitting the market next week. The government announces on Thursday its debt auctions on the three- and 10-year notes and the 30-year bond.

In other trading, the price of the 30-year Treasury bond dropped $1.53 per $100 invested, while its yield rose to 4.60 percent from 4.51 percent. The yield on the two-year note rose to 0.84 percent from 0.82 percent.

The three-month T-bill paid a yield of 0.05 percent. The discount was also 0.05 percent.