Prices for long-term Treasury debt fell Tuesday as optimism that Europe can solve its debt crisis undercut demand for the safest investments.
The leaders of France and Germany said this weekend they would release a plan to shore up Europe's struggling banks before the end of the month. Traders sold ultra-safe Treasurys and bought higher-risk investments that can yield bigger returns when the economy is strong.
Falling prices pushed the yield on the 10-year Treasury note up to 2.16 percent at 3:36 p.m. Eastern time, from 2.06 percent late Friday. It peaked earlier Tuesday at 2.18 percent. That's the highest since the end of August, before the Federal Reserve unveiled a plan aimed at lowering the yields on long-term notes and bonds. Bond trading was closed on Monday for Columbus Day.
Yield is the return that a bond such as a Treasury security generates over time. Lower prices push yields up because the owner pays less upfront, increasing the amount of overall return.
Also Tuesday, the Treasury Department auctioned $32 billion of three-year Treasury notes at a yield of 0.544 percent. That's far higher than the record-low 0.334 percent yield set at last month's auction of three-year debt. Demand for the notes was strong.
The 10-year yield has been rising since last Tuesday. Stocks and other riskier investments rose as fears about Europe's debt crisis eased.
The price of the 10-year note fell 75 cents for every $100 invested.
The price of the 30-year bond fell $2 for every $100 invested. Its yield rose to 3.11 percent from 3.01 percent late Friday.
The yield of the two-year Treasury note rose to 0.32 percent from 0.29 percent late Friday. The yield on the three-month Treasury bill was unchanged at 0.01 percent. Its discount wasn't available.