Treasurys edge higher
Prices for U.S. debt increase amid weak economic reports; Federal Reserve buys another $7.3 billion in debt.
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| Click the chart for current bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasurys drifted higher Tuesday as dour economic reports weighed on the market and the Federal Reserve bought another $7.3 billion in government debt.
The U.S. government reported that retail sales fell 1.1% in March after a revised gain of 0.3% in February. Sales in February were originally reported to have dipped 0.1%.
Another government report showed wholesale prices fell more than expected in March, reflecting economic weakness. The Producer Price Index declined 1.2% last month. Economists surveyed by Briefing.com had forecast a flat reading.
When the economic outlook darkens, investors often shift money into Treasurys, which are considered one of the most secure assets available. Stocks, on the other hand, fell sharply on Tuesday.
"The capital preservation trade is still the preferred one in my book," Kevin Giddis, head of fixed income sales at Morgan Keegan, wrote in a research note.
Meanwhile, the central bank bought another $7.3 billion in Treasurys after purchasing $7.4 billion worth on Monday. The Fed is scheduled to buy Treasury inflation-protected securities, or TIPS, on Thursday.
The purchases are part of the Fed's plan to buy $300 billion in government debt in an effort to drive down interest rates on consumer and business loans and give a jolt to the economy.
Bond prices: The benchmark 10-year bond rose 20/32 to 99 22/32, and its yield fell to 2.78% from 2.86% Monday. Bond prices and yields move in opposite directions.
The 30-year bond rose 28/32 to 97 2/32, and its yield fell to 3.66% from 3.71%.
The 2-year note gained 2/32 to 100 2/32, and its yield slipped to 0.84% from 0.98%.
The 3-month yield fell to 0.17% from 0.18%.
Lending rates: The 3-month Libor rate was 1.12%, according to Bloomberg.com, down slightly from 1.13% on Thursday - the last day the figures were published before the Easter holiday. The overnight Libor rate was 0.27%, up from 0.26%.
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 unchanged. The TED spread held steady at 0.94 percentage point, even with Thursday's reading. On Wednesday, the spread was 0.96 percentage point. The narrower the TED spread, the more willing investors are to take risks.
The Libor-OIS spread was unchanged from Thursday at 0.92 percentage point. The narrower the spread, the more cash is available for lending. 
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