Treasurys retreat

Click the chart for current bond prices and yields.

NEW YORK (CNNMoney.com) -- Treasurys fell Wednesday, erasing earlier gains, as investors sought higher returns in the stock market despite mixed corporate results.

Investment bank Morgan Stanley (MS, Fortune 500) reported a bigger-than-expected first-quarter loss and cut its dividend. The results highlighted fears about the health of the banking sector.

But investors appeared to look past Morgan's dismal quarter to focus on strong reports from blue-chip AT&T (T, Fortune 500) and McDonald's (MCD, Fortune 500). Those results helped boost sentiment on Wall Street, undermining demand for safe-haven assets such as Treasurys.

After a shaky opening, stocks advanced in morning trade, as technology and bank stocks rallied. But by the end of the session, Wall Street was mostly lower, with only the tech-laden Nasdaq able to hold onto 2 points.

While a number of major financial institutions, such as Goldman Sachs (GS, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500), have reported better-than-expected first-quarter results, analysts warn that the financial crisis will continue to take a toll on the banking sector.

Looking ahead, the Federal Reserve is set to buy an undisclosed amount of Treasurys Thursday as part of its campaign to purchase $300 billion in government debt. The Fed bought $7 billion worth of Treasury Inflation-Protected Securities, or TIPS, Tuesday.

By purchasing Treasurys, the central bank hopes to lower interest rates on certain business and consumer loans, such as mortgages, to help get the troubled economy back on track.

Also on Thursday, the Treasury Department plans to auction another $8 billion worth of TIPS.

Investors are also focused on the broader economy. Among the key indicators due later this week: initial jobless claims, durable goods orders, and new and existing home sales.

Bond prices: The benchmark 10-year note was down 12/32 to 98-12/32, and its yield rose to 2.95% from 2.9% late Tuesday. Bond prices and yields move in opposite directions.

The 30-year bond lost 1-4/32 to trade at 94-20/32, and its yield rose to 3.81% from 3.74%.

The 2-year note fell 2/32 to 99-27/32, and its yield rose to 0.97% from 0.95%.

The yield on the 3-month note eased to 0.14% from 0.15%.

Meanwhile, lending rates were mixed. The 3-month Libor was unchanged from Tuesday at 1.10%, according to Bloomberg.com. The overnight Libor rate increased to 0.21% Tuesday from 0.2% Monday.

Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London.