Tags: US | Credit | Markets

Bond Prices Rise as Auction Draws Solid Demand

Thursday, 29 Apr 2010 02:40 PM

The Treasury market is trading in a narrow range Thursday as investors balance European debt concerns with signs of an improving U.S. economy.

An auction of 7-year Treasury notes met with higher demand, giving Treasury prices a slight lift.

Stock prices rose after a report on jobs and strong earnings showed the economy is continuing to get better. The Dow Jones industrials is up about 140 points.

However, investors worldwide remain cautious about ongoing debt problems in Europe, particularly Greece. On Wednesday, Spain was the third country this week to see its debt rating slashed by Standard & Poor's, following Greece and Portugal.

European officials tried to reassure markets Thursday that they were rushing to approve a package of bailout loans that Greece has asked for. Investors tend to bid up prices of Treasury securities if they expect turmoil in other financial markets.

Market participants have been concerned that Greece could default on its debt and that the trouble there would spread to other countries. Those concerns helped drive up Treasury prices and pushed down yields earlier this week.

The yield on the 10-year Treasury note, a benchmark for many consumer loans, slipped to 3.76 percent in afternoon trading Thursday from 3.77 percent late Wednesday. Its price edged higher, rising 0.0625 cents to $98.875. The yield on the 10-year note is linked to rates on mortgages and other consumer loans.

The Labor Department's weekly update on jobless claims showed the number of people applying for unemployment benefits dipped for the second straight week, though they did not drop quite as far as predicted. First-time claims fell to 448,000 last week, slightly higher of expectations.

The auction of 7-year Treasury notes was greeted with solid demand, lifting Treasury prices. The Treasury Department sold $32 billion in notes. The bid-to-cover ratio, or the number of bids accepted compared with those received, was 2.82, higher than the 2.61 in an auction for notes with a similar maturity in March.

The auction wrapped up this week's $129 billion debt supply.

In other trading, the yield on the 2-year note that matures in March 2012 fell to 1.03 percent from 1.04 percent. Its price was unchanged at $99.9375.

The yield on 30-year bond that matures in February 2040 fell to 4.62 percent from 4.63 percent. Its price rose 0.1875 cents to $100.125.

The yield on the 3-month T-bill that matures July 29 rose to 0.16 percent from 0.15 percent.

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The Treasury market is trading in a narrow range Thursday as investors balance European debt concerns with signs of an improving U.S. economy.An auction of 7-year Treasury notes met with higher demand, givingTreasury prices a slight lift. Stock prices rose after a report...
US,Credit,Markets
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2010-40-29
Thursday, 29 Apr 2010 02:40 PM
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