Treasurys mixed after producer prices rise

AP News
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Posted: Aug 17, 2011 6:02 PM
Treasurys mixed after producer prices rise

Government bond prices were mixed on Wednesday as traders balanced concerns about the global economy with a report showing wholesale prices rose in July.

The Labor Department said Wednesday that its Producer Price Index rose 0.2 percent last month, after dropping in June. The index measures price changes in goods before they reach the consumer. The government's monthly report on consumer prices is due out Thursday morning.

In light trading, the 10-year Treasury note rose 56.2 cents for every $100 invested. That pushed its yield to 2.16 percent, down from 2.23 percent late Tuesday. The yield on the two-year note was unchanged at 0.19 percent. When bond prices rise their yields drop.

Signs that the economy was slowing, sharp swings in the stock market and other troubles have sent investors to the safety of Treasurys in recent weeks. That has sent some interest rates to their lowest levels on record. But signs of inflation usually send prices falling and yields rising, because inflation erodes the value of investments paying a fixed rate.

In other trading, the 30-year bond jumped $2. The higher price lowered the 30-year yield to 3.56 percent from 3.67 percent late Tuesday.

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