Treasury prices climb amid stock decline and as 7-year note auction comes in strong

Treasurys rise amid stock slump, strong auction

NEW YORK — Treasury prices continued to climb Thursday as investors sold out of stocks and after strong demand at the government’s latest debt auction.

The price of the benchmark 10-year note rose 10/32 to 102 1/32 and its yield fell to 3.38 percent from 3.41 percent late Wednesday. The yield on the 10-year note is closely tied to rates on consumer loans such as mortgages.

Treasurys were modestly higher throughout the day as investors shed riskier investments such as stocks and moved into government bonds and other relatively safe assets. Stocks declined broadly amid falling oil prices and a report showing an unexpected drop in existing home sales.

The National Association of Realtors said existing home sales fell 2.7 percent in August, while economists were predicting a fifth straight month of gains. A recovery in the housing market is seen as vital to any rebound in the economy.

Investors again set aside worries about long-term inflation as they moved further into bonds. The Treasury Department auctioned off $29 billion in seven-year notes Thursday afternoon, wrapping up the week’s auction schedule. Two-year and five-year notes were auctioned off earlier in the week.

Demand grew for the seven-year notes, which were reintroduced to the market this year to help fund the governments enormous stimulus spending program. The bid-to-cover ratio, a measure of demand, was 2.79, compared with 2.74 for similar notes last month.

The price of seven-year notes rose 9/32 to 100 1/32, sending its yield down to 2.99 percent from 3.04 percent late Wednesday.

In other trading, the price of the 30-year bond rose 14/32 to 105 17/32. Its yield fell to 4.17 percent from 4.19 percent.

The yield on the three-month T-bill fell to 0.08 percent from 0.09 percent. Its discount rate was 0.09 percent.

The cost of borrowing between banks fell. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — declined to 0.28 percent from 0.29 percent.