Treasurys slip after Spain worries abate

AP News
Posted: Apr 17, 2012 5:18 PM
Treasurys slip after Spain worries abate

U.S. Treasury prices slipped slightly Tuesday after concerns over Spain abated a little.

Spain raised more money than anticipated at a pair of short-term bond auctions, a sign that investors had started to regain some confidence in the country's ability to manage its debt burden.

The price of the 10-year U.S. Treasury note fell 9.3 cents for every $100 invested. The yield was 2 percent, up slightly from 1.98 percent late Monday.

Worries over Spain still remain, evidenced by a big increase in the interest rate the country had to pay investors to take $4.2 billion of its debt. It had to pay 2.6 percent for its 12-month notes compared to 1.4 percent in the last such auction March 20. And it paid 3.1 percent to sell 18-month-bills, up from 1.7 percent.

But investors were encouraged by news that Spain found plenty of interested buyers and was able to raise more money than anticipated. That helped lower the yield on Spain's 10-year bonds by 0.16 of a percentage point to 5.86 percent.

Spain has become the main source of concern in Europe's debt crisis in recent weeks as investors worry over the government's ability to push through a package of austerity measures at a time when the economy is in recession and unemployment is 23 percent.

The yield on the country's ten-year bond has spiked above 6 percent in recent days, not far off the 7 percent rate that eventually forced Greece, Ireland and Portugal into seeking financial help from their partners in the euro zone.

As those worries flared last week, investors rushed into the safety of U.S. Treasury bonds, sending yields lower.

Though worries have abated, investors are waiting to see if Spain will be able to raise enough money at its 10-year bond auction later this week.

The price of the 30-year bond fell 18.7 cents, sending its yield up to 3.14 percent, from 3.13 percent late Monday.

The yield on the 2-year note remained at 0.27 percent.

In the market for short-term bills, the 3-month T-bill paid a yield of 0.08 percent.