Treasury prices fall
Prices for US debt sink as supply blankets the market and a couple of economic reports give a boost to sentiment.
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| Click the chart for current bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasurys fell Tuesday in the wake of a $35 billion auction of 5-year notes and as two key economic reports showed some hope for the economic recovery.
The Treasury Department auctioned $35 billion worth of 5-year notes Tuesday after selling $40 billion in 2-year notes Monday. On Wednesday, the government will offer $26 billion worth of 7-year notes.
The 5-year note fell 12/32 to 99 6/32 and its yield edged up to 1.93%.
While demand for U.S. debt has remained relatively robust, with Monday's auction garnering a healthy bid-to-cover ratio of 2.7%, many investors worry that prices will be pushed lower as the government floods the market with supply.
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.
Meanwhile, the Conference Board, a business research group, said Tuesday that its consumer confidence index jumped to 39.2 this month from an upwardly revised 26.9 in March. The increase was larger than expected.
Also, the S&P/Case-Shiller Home Price Index showed the decline in home prices has slowed. The 20-city home price index fell 18.6% from February 2008, compared with a 19% year-over-year decline in January.
However, the number of cases of swine flu continued to grow as the World Health Organization moved a step closer to declaring a pandemic.
Economists say the outbreak could derail a global economic recovery if it isn't contained. That possibility helped boost demand for safe-haven assets such as Treasurys.
Wall Street ended the session down just a smidgen, as investors worried about the swine flu and the health of the nation's banking sector.
Bond prices: The benchmark 10-year note fell 25/32 to 97 27/32, and its yield rose to 3.01% from 2.92% late Monday. Bond prices and yields move in opposite directions.
The 30-year bond sank 2 2/32 to trade at 92 4/32, and its yield rallied to 3.96% from 3.84%.
The 2-year note was down 4/32 to 99 28/32, and its yield rose to 0.95% from 0.89%.
The yield on the 3-month note rose to 0.13% from 0.10%.
Meanwhile, lending rates were mixed. The 3-month Libor fell to 1.04% from 1.05% Monday, according to Bloomberg.com. The overnight Libor was unchanged at 0.21%.
Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London. 
