Treasury prices gain on strong 7-year note auction

AP News
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Posted: Nov 23, 2011 3:54 PM
Treasury prices gain on strong 7-year note auction

Investors continued to buy U.S. Treasurys despite rock-bottom yields, reflecting the depth of anxiety in global markets.

The U.S. government on Wednesday sold $29 billion in seven-year notes at a record low yield and strong demand.

In Germany, a government debt auction drew the weakest demand in over a decade. Germany is Europe's biggest economy and an anchor for the rest of the continent. That investors would spurn German government bonds was a sign of how worried they were over the deepening debt crisis in the region.

The seven-year Treasury notes in the U.S. drew a yield of 1.415 percent. The ratio of bids to notes sold was 3.2, the highest level of demand since May and higher than an average of 2.8 for the past 10 auctions.

The seven-year offering was the third of three auctions of U.S. notes this week totaling $99 billion. The two-year note auction on Nov. 21 also produced high demand, while Wednesday's five-year note auction produced another record low yield.

On Wednesday, the yield on the benchmark 10-year Treasury note fell to 1.89 percent, from 1.94 percent late Tuesday. The price, which moves inversely to the yield, rose 62.5 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 2.83 percent from 2.91 percent. Its price rose $1.21 per $100 invested.

The three-month T-bill paid a yield of 0.01 percent. Its discount wasn't available.