Treasurys bounce back as European debt falters

AP News
Posted: Apr 04, 2012 5:57 PM
Treasurys bounce back as European debt falters

Treasury prices rose Wednesday as weak demand at auctions for Spanish government debt led traders to dump bonds issued by heavily indebted European countries.

Spain failed to generate strong interest in an auction of three- to eight-year bonds. That raised fears that the country will have difficulty raising money from the bond market. They sold debt issued by Spain, Italy and other nations that might default if they lose the market's confidence.

The yield on Spain's benchmark 10-year bond shot up to 5.65 percent from 5.40 percent earlier Wednesday. Italy's borrowing costs also rose.

As traders sold European bonds, they bought safer investments such as German bunds and U.S. Treasurys. U.S. stocks also plunged, further increasing demand for low-risk, low-return investments.

The price of the 10-year Treasury note rose 65.6 cents for every $100 invested, pushing its yield down to 2.23 percent from 2.29 percent late Tuesday.

The price of the 30-year Treasury bond rose $1.47 per $100 invested, pushing its yield down to 3.36 percent from 3.43 percent late Tuesday.

The yield on the two-year Treasury note fell to 0.34 percent from 0.37 percent. The yield on the three-month Treasury bill was unchanged at 0.08 percent.