Treasury prices gain on strong 5-year note auction

AP News
Posted: Nov 22, 2011 3:38 PM
Treasury prices gain on strong 5-year note auction

Treasury prices rose Tuesday after the government sold five-year notes at a record low yield.

The Treasury Department sold $35 billion of five-year notes at a yield of 0.94 percent, beating the previous record low of 1.02 percent set in September. That's a sign that demand remains high for U.S. government debt.

Investors have been buying Treasurys as an alternative to holding debt issued by European governments, whose value has been declining because of worries over ballooning budget deficits. Spain had to pay sharply higher interest rates in an auction of short-term debt Tuesday.

The yield on the benchmark 10-year Treasury fell to 1.94 percent. Late Monday it was trading at 1.97 percent. The price of the note rose 9.4 cents per $100 invested.

In other trading, the yield on the two-year Treasury note was flat at 0.27 percent.

The yield on the 30-year bond fell to 2.91 percent from 2.95 percent. Its price rose 78.1 cents per $100 invested.

The three-month T-bill paid a yield of 0.02 percent. Its discount wasn't available.