Bonds bounce on stock selloff
Investors pile into safe-haven Treasurys following weakness on Wall Street. In strong auction, government sells almost $59 billion in short-term notes.
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| Click on the chart to see other government bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasurys enjoyed a small bounce Monday as a government auction of short-term notes attracted high demand and as investors sought shelter from a selloff in stocks.
U.S. stocks tumbled Monday, extending a broader selloff across global markets. Chinese stocks sank 6% to a three-month low on worries about bank lending. Those worries typically prompt investors to shift assets to safe-haven Treasurys from more risky equities.
Nearly $60 billion in Treasurys hit the chopping block Monday. The government sold $30 billion in 3-month notes and $29 billion in 6-month notes.
That made for a bid-to-cover ratio of 3.88, well above the long-term average of 2.56 for the securities. The ratio reflects the market's demand for bonds.
In recent weeks, the government has auctioned large amounts of debt in an effort to fund a growing deficit and help pull the economy out of recession. Last month, auctions of 2-year and 5-year notes received lower than average bid-to-cover ratios.
Bond prices: The benchmark 10-year note ticked up 12/32 to 101-28/32, and its yield slipped to 3.41% from 3.43% late Friday. Bond prices and yields move in opposite directions.
The 2-year note edged up 3/32 to 100-2/32, and its yield fell to 0.98%.
The 30-year bond rose 12/32 to 105-13/32, and its yield slipped to 4.18%. The 3-month note yielded 0.14%.
Lending rates: Bank-to-bank lending indicators have been holding at historically low levels recently, a positive sign for once-frozen pipelines of credit.
The 3-month Libor was 0.35%, according to Bloomberg.com, and the overnight Libor rate was 0.23%.
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. 
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