Stock losses lift Treasury prices

AP News
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Posted: May 11, 2011 5:10 PM
Stock losses lift Treasury prices

Treasury prices rose Wednesday after investors pulled out of stocks and the government's second auction of the week drew solid demand.

The price on the 10-year Treasury note rose 46 cents per $100 invested late Wednesday. Its yield fell to 3.16 percent from 3.22 percent late Tuesday. Price and yield move in opposite directions.

Traders sought safer assets after a drop in gasoline demand suggested that consumers are curbing their spending. That sparked fears that the economy could slow. A decline in the euro and a rise in China's inflation also spooked stock markets.

The Treasury Department sold $24 billion in 10-year notes Wednesday. The note paid 3.125 percent compared with 3.625 percent in the previous 10-year note auction last month. Investors placed bids for 3 times the amount offered, lower than the 3.13 ratio at the prior auction.

The Treasury plans to sell $16 billion in 30-year bonds on Thursday in the last of its auctions this week. The producer price index, one measure of inflation, is set to be released right before the auction.

Inflation expectations have become a hot topic among traders as the economy recovers. Higher inflation could prompt the Federal Reserve to tighten its monetary policy and increase interest rates.

In other trading, the price on the 30-year Treasury bond rose 68 cents per $100 invested, while its yield fell to 4.31 percent from 4.35 percent. The yield on the two-year note slipped to 0.55 percent from 0.60 percent.

The three-month Treasury bill paid a 0.01 percent yield. Its discount was 0.03 percent.