Treasurys slip after business activity picks up

AP News
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Posted: Feb 29, 2012 3:22 PM
Treasurys slip after business activity picks up

Treasury prices edged lower Wednesday on new signs of economic strength.

The 10-year Treasury note fell 34.3 cents for every $100 invested. The drop in price raised the yield to 1.99 percent, up from 1.94 percent late Tuesday.

Treasury prices fell after a gauge of businesses activity in the Chicago area came in much higher than economists expected. The Institute for Supply Management's business barometer for Chicago rose to its highest level in 10 months. Treasurys also slipped lower after Federal Reserve chairman Ben Bernanke dampened speculation that the Fed would launch a new bond-buying effort.

In testimony before Congress, Bernanke said the economy was recovering at a better pace than the Fed had expected. Investors appeared to take Bernanke's more optimistic tone as a signal that the Fed is unlikely to take new steps to boost growth. It could also mean that the Fed may back off its pledge to keep its key short-term interest rate near zero until late 2014.

In other Treasury trading, the 30-year bond's price fell 50 cents for every $100. The yield rose to 3.10 percent from 3.07 percent. The yield on the two-year note was unchanged at 0.30 percent.

In the market for short-term bills, the three-month T-bill paid a yield of 0.08 percent.