Treasurys fall on details of European crisis plan

AP News
Posted: Oct 24, 2011 5:23 PM
Treasurys fall on details of European crisis plan

Treasury prices fell Monday as details emerged of a possible plan to stem the spread of the Greek debt crisis.

Yields on ultra-safe Treasurys edged higher, but wobbled in a narrow range as traders awaited a major announcement from European leaders expected on Wednesday.

The price of the 10-year Treasury note fell 6 cents for every $100 invested, pushing its yield up to 2.23 percent at 4 p.m. from 2.22 percent late Friday.

Bond yields rise as their prices fall.

Prices for Treasury notes slipped in part because the Treasury Department plans to auction $99 billion worth of them later this week, analysts said. Traders often sell Treasurys before an auction to make space for the new supply. By establishing a lower market price, they also can push the auction price lower.

The Treasury Department will auction off $35 billion of two-year notes on Tuesday, $35 billion of five-year notes on Wednesday and $29 billion of seven-year notes, it said last week.

The yield on the two-year note rose to 0.29 percent from 0.28 percent. The yield on the five-year note rose to 1.09 percent from 1.07 percent. The yield on the seven-year note rose to 1.69 percent from 1.66 percent.

Treasurys rose early Monday as traders monitored Europe's talks, which had produced few specifics. They fell sharply later Monday morning, sending the 10-year yield to 2.24 percent at 9 a.m. Eastern time from 2.18 percent less than a half-hour earlier. They spent the rest of the day rising and falling, but not by much.

Leaders of European nations and Greece's lenders are trying to prevent a messy default by Greece, shore up European banks and prevent the debt crisis from spreading.

Plans revolved around expanding the lending power of the $600 billion bailout fund agreed to in July. One way would be to guarantee government bonds against losses, so that private investors would be encouraged to buy them. Another would seek money from outside investors such as sovereign wealth funds.

In other trading, the price of the 30-year Treasury bond fell 69 cents per $100 invested, leaving its yield unchanged at 3.27 percent.

The yield on the three-month Treasury note was flat at 0.01 percent. Its discount wasn't available.