Treasurys rally as stocks fall off

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NEW YORK (CNNMoney.com) -- Treasurys rose Monday as Wall Street fell and investor concern grew over the economic implications of a possible swine flu pandemic.

As many as 103 deaths in Mexico are thought to have been caused by swine flu, which the World Health Organization has called a "public health emergency of international concern."

The outbreak appears to have originated in Mexico. But cases have spread to countries around the world, raising worries about the possibility of a pandemic. Prices for U.S. debt securities, which are considered one of the most secure investments available, often rise when investors think a global event may destabilize the economy.

Wall Street was concerned over the swine flu, and the Dow Jones industrial average shed more than 50 points.

Meanwhile, the Federal Reserve bought another $7 billion worth of Treasurys as part of its ongoing campaign to drive down interest rates for consumers and businesses. To date, the central bank has purchased $65 billion worth of Treasurys.

Also Monday, the Treasury Department auctioned $40 billion in 2-year notes. That will be followed by a $35 billion auction of 5-year notes Tuesday, and $26 billion of 7-year notes on Wednesday.

The government has issued record amounts of debt in recent months to help fund its various economic stimulus and financial bailout plans.

The Treasury estimates that it will borrow $361 billion of debt in the April to June quarter, according to the quarterly refunding announcement released Monday. During the July to September quarter, the Treasury expects to borrow $515 billion. That compares to the $481 billion in debt that the Treasury borrowed in the first quarter of this year.

While demand for U.S. debt has remained relatively robust, many investors worry that prices will be pushed lower as the government floods the market with supply.

Bond prices: The benchmark 10-year note rose 22/32 to 98 19/32, and its yield fell to 2.92% from 2.99% late Thursday. Bond prices and yields move in opposite directions.

The 30-year bond slipped 22/32 to trade at 94, and its yield rose to 3.84%.

The 2-year note was up 5/32 to 100, and its yield fell to 0.89% from 0.97%.

The yield on the 3-month note was unchanged at 0.10%.

Meanwhile, lending rates were mixed. The 3-month Libor fell to 1.05% from 1.07% Friday, according to Bloomberg.com. The overnight Libor edged higher to 0.21% from 0.2%.

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