Treasurys fall after weak demand for 7-year notes

AP News
Posted: Jun 29, 2011 6:09 PM
Treasurys fall after weak demand for 7-year notes

Weak demand at an auction for Treasury notes sent bond prices lower Wednesday.

A sale of $29 billion in seven-year notes drew less interest from investors than other recent auctions.

Investors placed bids for 2.6 times the amount of notes offered compared to an average of 2.8 times at recent auctions. The government had to pay a yield of 2.43 percent on the notes, more than the 2.39 percent analysts expected. This was the third auction that didn't perform well this week.

"This week's Treasury auctions were as clear a `No Confidence' vote for Treasuries as we've seen in a long while," William O'Donnell, U.S. government bond strategist at RBS Securities, wrote in a note to clients.

The price of the 10-year note fell 68.7 cents for every $100 invested. Its yield rose to 3.11 percent from 3.03 percent late Tuesday. Bond yields rise when their prices fall.

Also diminishing the interest in U.S. debt was the passage of an austerity package in Greece put that country closer to avoiding a default on its debt. That decreased demand for lower-risk investments like U.S. government bonds.

In other trading, the 30-year Treasury bond fell 78.1 cents. Its yield rose to 4.37 from 4.32 percent Tuesday.

The yield on the three-month T-bill was unchanged at 0.01 percent. Its discount was 0.02 percent.