Treasury prices mixed after Fed purchase
Investors weigh government buy back with expectations of new debt issues.
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| Click the chart to see other government bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasury prices were mixed Monday after the Federal Reserve purchased $7.5 billion of its own debt, and the market braced itself for a busy issuance week.
A flood of debt supply was weighing down prices. As the government has been spending at historic rates, it has also had to issue a large volume of debt to fund its efforts.
Last Thursday, Treasury announced the auction of $65 billion in debt this week. That includes $35 billion in 3-year notes Tuesday, $19 billion in the reopening of a 10-year note Wednesday and $11 billion in the reopening of the 30-year bond Thursday.
In an effort to ease the strain of all that new debt, the government plans to buy back $300 billion in Treasurys in hopes that it will spark demand and keep yields in check.
As part of that campaign, on Monday morning the Federal Reserve bought $7.5 billion worth of debt that matures between December 2013 and April 2016.
Meanwhile, U.S. stocks fell Monday morning, with the Dow Jones industrial average (INDU), the S&P 500 (SPX) and the Nasdaq composite (COMP) all down about 1% early in the session. A lower stock market tends to send investors to safe-haven Treasurys. By the end of the session, however, stocks had trimmed losses to end the day little changed.
Bond prices: The benchmark 10-year note fell 12/32 to 93-26/32, and its yield rose to 3.88% from 3.86%. Bond prices and yields move in opposite directions.
On Friday the 10-year yield rose as high as 3.88%, the highest level since November, before retreating.
The 30-year bond gained 8/32 to 94-3/32, and its yield slipped to 4.62% from 4.65% late Friday.
The 2-year note edged down 7/32 to 98-31/32, and its yield rose to 1.42%. The yield on the 3-month note inched down to 0.18% from 0.19%.
Lending rates: One key bank-to-bank rate bounced higher. The 3-month Libor jumped to 0.65%, from 0.63% Friday, according to Bloomberg.com.
The overnight Libor rate was unchanged at 0.26%.
Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money. The closely-watched benchmark is used to calculate adjustable-rate mortgages. More than $350 trillion in assets are tied to Libor. 
