Treasurys rise after strong auction results
Prices for U.S. bonds increase after a sale of 7-year notes sees solid demand, stocks slip.
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| Click the chart for current bond prices and yields. |
NEW YORK (CNNMoney.com) -- Treasurys rose Thursday after a government debt sale drew strong demand and a weaker-than-expected housing report boosted demand for the safety of U.S. debt.
The government received bids totaling nearly $81 billion for the $29 billion worth of 7-year notes sold Thursday. The bid-to-cover ratio, which measures demand for the assets, was a robust 2.79. That compares with an average of 2.48 over the last seven auctions.
Indirect bidders, which include foreign central banks, bought 62% of the 7-year notes at Thursday's auction.
The newly issued note was priced at 99 31/32 with a median yield of 2.94%.
Tuesday's offering of $43 billion in 2-year notes was also well received. But demand for Wednesday's $40 billion sale of 5-year notes was softer.
All told, the U.S. sold a record $112 billion worth of Treasurys this week. It was the latest in a string of record-sized debt sales the government has held this year to help pay for its economic stimulus efforts and service an ever-expanding budget deficit.
While the market continues to absorb the new issues, many analysts worry that investors will begin demanding higher yields, which would make it harder for the U.S. to fund its activities.
Meanwhile, stock prices fell for the second day in a row as investors responded to a surprise drop in sales of existing homes. Despite Thursday's decline, the major gauges remain near their highest levels in a year.
The National Association of Realtors said sales of existing homes fell to a seasonally adjusted 5.1 million unit rate in August from a 5.24 million unit rate in July.
Economists surveyed by Briefing.com forecast that sales would rise to a 5.3 million unit rate in the month.
A report from the Labor Department showed weekly jobless claims fell for the third week in a row.
The number of Americans filing new claims for unemployment fell to 530,000 last week from a revised 551,000 in the prior week. Economists thought claims would rise by 5,000.
Continuing claims, a measure of Americans who have been receiving benefits for a week or more, fell to 6.138 million from 6.261 million in the previous week. Economists expected a rise.
The reports underscored the mixed outlook for the U.S. economy, which has shown sings of improvement but still faces a long road to recovery.
In a policy statement released Wednesday, the Federal Reserve said it sees signs that economic activity has "picked up" but that high unemployment remains a concern.
Bond prices: The benchmark 10-year note was up 10/32 to 102, and its yield fell to 3.38% from 3.41% late Wednesday. Bond prices and yields move in opposite directions.
The 5-year note gained less than 1/32 to 100 1/32. Its yield fell to 2.37% from a median yield of 2.39% at Wednesday's auction.
The 30-year bond rose 12/32 to 105-17/32, and its yield eased to 4.17%.
The 2-year note was up 1/32 to 100-3/32 with a yield of 0.94%.
The yield on the 3-month bill was 1%. 
