Treasurys drop after central banks take action

AP News
Posted: Nov 30, 2011 4:43 PM
Treasurys drop after central banks take action

U.S. government bond prices fell Wednesday after the Federal Reserve and other major central banks took steps to ease the European debt crisis.

The Fed and five other central banks cut the cost of lending dollars to commercial banks by half Wednesday.

The move is aimed at making it easier for European banks to raise money and keep credit flowing to people and businesses. U.S. money market funds have been pulling dollars out of European banks over recent months as the European debt crisis expanded beyond Greece to Italy.

Stock markets in Europe and the U.S. soared on the news, but the reaction from the U.S. bond market was muted in comparison. But borrowing costs remain extremely high for indebted countries such as Italy and Spain.

The price of the benchmark 10-year Treasury note dropped 78.1 cents per $100 invested. Its yield rose to 2.08 percent from 2 percent late Tuesday.

The yield on the 30-year Treasury bond rose to 3.06 percent from 2.96 percent Monday. Its price fell $2.06 per $100 invested. The yield on the two-year note dipped to 0.26 percent from 0.27 percent.

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