Bonds fall as Wall Street rallies
Treasurys lose ground as investors look for higher returns in more risky assets.
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| Click the chart to view other bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasury debt prices retreated Tuesday after a $96 billion auction of U.S. debt and a commodities-fueled stock rally.
The Treasury Department sold $38 billion in 3-year notes, $29 billion in 3-month bonds and $29 billion in 6-month notes. In recent months, the government has auctioned large amounts of debt in an effort to fund a growing deficit and help pull the economy out of recession.
Bids for the 3-year notes were 3.02 times the amount of the sale, a statistic known as the bid-to-cover ratio that reflects the market's demand for bonds. That's well above the long-term average of 2.56.
"That's a very strong ratio, which bodes well [for bonds]," said Peter Cardillo, analyst at Avalon Partners. "It means buyers are not shying away."
A reopening of last month's 10-year note sale is slated for Wednesday and a reopening of the 30-year bond is on tap for Thursday.
As Cardillo noted, major U.S. stock gauges neared 2009 highs Tuesday. Equities were pulled higher by an upgrade of Dow component General Electric (GE, Fortune 500) and gains in the commodities sector from a 4% spike in oil prices and gold prices rising above $1,000.
Bond prices typically fall when stocks rally as investors become more willing to buy riskier assets, and demand for safe-haven assets decreases.
Bond prices: The benchmark 10-year note fell 11/32 to 101-6/32, and its yield rose to 3.47% from 3.44%. Bond prices and yields move in opposite directions. Treasurys did not trade Monday, in observance of the Labor Day holiday.
The 30-year bond ticked down 28/32 to 103 and its yield increased to 4.32%.
The 2-year note dropped 1/32 to 100-3/32, and its yield was 0.94%.
Lending rates: Bank-to-bank lending rates have plummeted to record lows in recent weeks, a good sign for the once-frozen pipelines of credit.
The three-month Libor fell to 0.3% from 0.46% late Friday, according to Bloomberg.com. The overnight Libor rate ticked down to 0.22%.
The London Interbank Offered Rate -- or Libor -- 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.
An earlier version of this story indicating declines in Treasurys was based on erroneous data. CNNMoney.com regrets the error. 
