Treasury prices slide
Investors consider economic recovery plans on their way to fruition - and the price tag associated with them.
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| Click on chart to see other government bond prices and yields. |
NEW YORK (CNNMoney.com) -- Government debt prices slid Friday as investors assessed the Obama administration's economic rescue efforts and the volume of debt coming to market to fund the operations.
The government bond market closed at 2 p.m. ET and is closed Monday for Presidents Day.
Stimulus jitters: The House and Senate are slated to vote Friday on the $787 billion economic stimulus compromise bill, but investors are concerned about the measure's effectiveness.
"People are looking at the U.S. Treasury explode and then questioning what it is being used for," said Nick Kalivas, vice president of financial research at MF Global.
"Once these programs go into place, it is very hard to cut them," said Kalivas. He said that if stimulus doesn't deliver strong growth, the government could have trouble finding long-term buyers of the debt.
"Investment markets are looking for a short-term fix and to date, nothing has been offered that will effectively turn the economy around in the short term," said Kenneth Naehu, managing director and head of fixed income at Bel Air Investment Advisors.
The Treasury market is particularly concerned about demand for U.S. debt from abroad. "The Chinese and Indians and a lot of countries are issuing a lot of debt to do their own stimulus packages, so the market is kind of nervous about who is going to buy all the supply we are going to be issuing," said Kalivas.
This week, the Treasury completed a record $67 billion quarterly refunding, including the sale of 3-, 10- and 30-year issues.
Debt prices: The price of the 10-year note fell 30/32 to 98-24/32 and its yield rose to 2.90%. Bond prices and yields move in opposite directions.
The yield of the newly issued 30-year bond rose to 3.69% from 3.50% late Thursday. The 2-year note edged down 3/32 to 99-27/32 and its yield rose to 0.97%.
The yield on the 3-month note was unchanged at 0.30%. Demand for the shorter-term note is seen as a gauge for investor confidence.
Lending rates: Bank-to-bank lending rates were almost unchanged. The 3-month Libor rate was 1.24% Friday, according to data on Bloomberg.com. The overnight Libor rate, meanwhile, held steady at 0.30%.
Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London.
Two credit market gauges were showed a decrease in confidence in the lending markets. The "TED" spread widened to 0.94 percentage point from 0.93 percentage point the previous day. The bigger the TED spread, the less willing investors are to take risks.
Another market indicator, the Libor-OIS spread, increased to 0.97 percentage point from 0.96 percentage point the previous day. The wider the spread, the less cash is available for lending. 
