Treasury prices rise on hopes of debt solution

AP News
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Posted: Jul 19, 2011 5:22 PM
Treasury prices rise on hopes of debt solution

Treasury prices rose Tuesday after President Obama backed a bipartisan plan to settle the debt ceiling issue.

The government will be unable to meet its financial obligations unless Congress raises the nation's debt ceiling before August 2. Obama announced at a press briefing Tuesday that he endorsed a solution presented by a group of six bipartisan Senators that would reduce the nation's deficit by $3.7 trillion over 10 years. The plan would cut spending and increase tax revenues by closing some loopholes.

The president's endorsement made investors feel more comfortable buying Treasurys because it lowered the possibility of a default. Prices for the 10-year note rose 37 cents for every $100 invested. The yield fell to 2.88 percent from 2.93 percent late Monday.

The 30-year Treasury bond gained $1.87 per every $100 invested. Its yield fell to 4.19 percent from 4.32 percent.

Bond yields fall when their prices rise.

The yield on the 3-month bill rose to 0.01 percent after yielding zero percent the day before. Its discount was 0.02 percent.