Treasurys rebound from big sell-off last week, sending yields lower ahead of more auctions
By Sara Lepro, APMonday, August 24, 2009
Treasury prices bounce back ahead of auctions
NEW YORK — Treasurys bounced back Monday, sending yields lower ahead of another round of auctions this week.
Both long- and short-term government debt recouped much of their big losses from Friday, which were driven by a surge in stocks after the National Association of Realtors reported a bigger-than-expected jump in home sales and Federal Reserve Chairman Ben Bernanke said the economy was on the cusp of recovery.
Investors were taking advantage of relatively low prices for Treasurys Monday ahead of the latest round of auctions. The Treasury Department is issuing $197 billion in debt this week, including $42 billion in two-year notes, $39 billion in five-year notes and $28 billion in seven-year notes as part of its ongoing efforts to fund the government’s financial rescue package and other stimulus programs.
Recent auctions have been fairly well received, but investors still fear that demand could weaken as supply mounts. That would force the government to lure in buyers with higher returns, which in turn would raise borrowing costs on loans such as mortgages that are tied to Treasury yields.
“The country’s debt is an issue,” said Tim Courtney, chief investment officer at Burns Advisory Group. “There’s still so much more money to raise.”
On Monday, the benchmark 10-year Treasury note rose 24/32 to 101 8/32, sending its yield down to 3.48 percent from 3.57 percent late Friday. The 30-year bond jumped 1 25/32 to 103 29/32, and its yield fell to 4.27 percent from 4.38 percent.
In other trading, the two-year note rose 5/32 to 99 30/32 and its yield fell to 1.03 percent from 1.10 percent.
The yield on the three-month T-bill slipped to 0.15 percent from 0.16 percent. Its discount rate was 0.16 percent.
The cost of borrowing between banks was unchanged. The British Bankers’ Association said the rate on three-month loans in dollars — the London Interbank Offered Rate, or Libor — held steady at 0.39 percent.
