Treasury prices rise on economic reports

AP News
Posted: Apr 28, 2011 5:22 PM
Treasury prices rise on economic reports

Investors bought Treasurys Thursday after two key reports pointed to a less robust economy.

The price of the 10-year Treasury note rose 34.3 cents per $100 invested in late trading. Its yield fell to 3.32 percent from 3.35 percent late Wednesday. Bond yields fall when their prices rise.

The government reported the economy slowed in the first quarter to a 1.8 percent annual growth rate. That is weaker than the 3.1 percent growth in the previous quarter. The gains were restrained because the market priced in a lower GDP number after Federal Reserve Chairman Ben Bernanke said Wednesday that he expected the figure to come in below 2 percent.

Also, more people applied for unemployment benefits last week for the second time in three weeks, a sign of an uneven job market rebound. Some analysts noted that the week included the Easter holiday, which changes every year and runs the risk of distorting seasonal adjustments.

Investors tend to seek safer assets when the economy appears soft.

A relatively poor showing at a $29 billion seven-year note auction Thursday helped keep a lid on prices.

The Treasury Department paid a yield of 2.71 percent compared with 2.90 percent it paid for the previous seven-year note auction last month. Investors placed bids for 2.63 times the amount offered, lower than the 2.79 ratio at the prior auction.

The seven-year note's yield was 2.67 percent in late trading Thursday.

In other trading, the price of the 30-year bond rose 71.8 cents per $100 invested, while its yield fell to 4.42 percent from 4.45 percent. The yield on the two-year note slipped to 0.63 percent from 0.65 percent.

In the market for short-term Treasury bills, the three-month T-bill paid a 0.03 percent yield. Its discount was 0.04 percent.