Treasury prices rise on tame inflation reading

AP News
Posted: Dec 16, 2011 4:51 PM
Treasury prices rise on tame inflation reading

Treasury prices rose Friday after the government reported that inflation remained tame last month.

In afternoon trading, the benchmark 10-year Treasury note is up 53.1 cents for every $100 invested. Its yield fell to 1.85 percent from 1.91 percent Thursday.

Treasurys had a strong week following a series of blockbuster auctions of new debt. The government auctioned 30-year bonds at a record low yield of 2.925 percent Wednesday. Foreign demand for Treasurys has also been strong.

The government said consumer prices stayed flat in November, the latest evidence that inflation is at bay. Energy costs dropped for the second straight month. Low inflation makes bonds attractive to investors because it means the value of a bond's fixed income payments won't diminish as much over time.

The price of the 30-year bond rose $1.25, while its yield dropped to 2.86 percent from 2.91 percent late Thursday. The yield on the two-year note fell to 0.24 from 0.25 percent.

In the market for Treasury bills, the yield on the three-month T-bill was negative 0.01 percent.