Treasury prices mixed as stocks advance, Federal Reserve buys more debt

Treasury prices mixed amid increased risk appetite

NEW YORK — Treasury prices ended narrowly mixed Wednesday as investors’ appetite for risk increased.

The mixed trade came as stocks climbed amid reports showing an improvement in manufacturing activity, both in the United States and abroad. Demand for government debt tends to fall off when stocks rise, as investors look for higher returns in riskier assets.

Bonds, however, found some support from purchases by the Federal Reserve. The Fed bought about $3 billion worth of government debt on Wednesday having maturities ranging from 10 to 17 years. The central bank has committed to buying Treasurys this year in an effort to offset the massive amounts of debt the government is issuing to fund its stimulus programs.

Worries that such large amounts of debt would be met with weak demand drove yields on long-term Treasurys to their highest levels of the year in June. But some of those fears have eased as auctions attract solid demand.

In late trading, the benchmark 10-year Treasury note’s yield was flat at 3.54 percent. Its price fell 1/32 to 96 17/32.

The 30-year bond’s yield was unchanged at 4.34 percent. Its price fell 1/32 to 98 20/32.

The two-year note’s yield fell to 1.05 percent from 1.13 percent, and its price rose 5/32 to 100 5/32.

The three-month T-bill’s yield was 0.16 percent, down from 0.18 percent late Tuesday. The discount rate was 0.17 percent.

The British Bankers’ Association said the rate on three-month loans in dollars — known as the London Interbank Offered Rate, or Libor — fell 0.01 of a percentage point to a fresh low of 0.59 percent.