Treasury rally revs up again

10-year-yield.png By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Treasury prices rose Wednesday, turning around from earlier losses, as investors welcomed an announcement that the government will buy $32 billion in bonds through mid-November.

What's moving prices: Treasurys fell most of the day after investors welcomed strong earnings from Intel (INTC, Fortune 500) reported and JPMorgan Chase (JPM, Fortune 500).

Bonds are traditionally thought of as a lower risk alternative to stocks, so when confidence in the economy is strong, Treasurys often fall. And vice versa.

But later in the afternoon, Treasurys turned around and staged a rally after the Treasury Department said it will buy $32 billion in Treasurys through mid-November. Anticipation of lower supply often pushes prices up.

Lately, demand for Treasurys has surged as Wall Street counts on recent weak economic reports to push the Federal Reserve into another round of asset purchases.

Since September 2008, the Fed has pumped about $2 trillion into the economy through asset purchases -- a policy known as quantitative easing. But when the Fed emerged from its latest policy-making meeting in September with a bearish outlook, it dropped hints that led Wall Street to think more purchases are on the way -- and soon.

"In light of all the recent signals, 'soon' almost certainly will be the November FOMC meeting," said Kevin Giddis, president of fixed income capital markets, in a note to investors Wednesday.

On Tuesday, minutes released from the Federal Open Market Committee's Sept. 21 meeting, confirmed the bank is leaning towards more quantitative easing.

What yields are doing: Yields on 10-year notes stayed at 2.42% and the 30-year bond stayed at 3.82%. The 5-year note fell to 1.12%, down from 1.14% the day before.

The 2-year note's yield hit 0.37%, down from 0.38% on Tuesday.

Prices and yields move in opposite directions.

Auctions: A government auction of $21 billion in 10-year notes on Wednesday drew weaker demand than previous auctions for the same notes. The notes were auctioned at a yield of 2.475%, the 10-year's lowest yield at auction since January 2009.

On Tuesday, the government issued $32 billion in 3-year notes. But the auction -- which was held at a record low yield of 0.569% -- brought in less demand than the five previous auctions for the short-term notes.

On Thursday, the government will auction $13 billion of 30-year bonds. To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Overnight Avg Rate Latest Change Last Week
30 yr fixed3.98%4.08%
15 yr fixed3.09%3.11%
5/1 ARM3.20%3.22%
30 yr refi4.06%4.16%
15 yr refi3.17%3.20%
Rate data provided
by Bankrate.com
View rates in your area
 
Find personalized rates:
Index Last Change % Change
Dow 17,810.06 91.06 0.51%
Nasdaq 4,712.97 11.10 0.24%
S&P 500 2,063.50 10.75 0.52%
Treasuries 2.32 -0.02 -0.86%
Data as of Nov 23
Company Price Change % Change
Bank of America Corp... 17.12 0.12 0.71%
Kinder Morgan Inc 39.75 -0.17 -0.43%
Apple Inc 116.47 0.16 0.14%
Intel Corp 35.59 -0.36 -1.00%
Microsoft Corp 47.98 -0.72 -1.48%
Data as of Nov 21

Sections

This arrangement, announced Friday, illustrates how the lines have blurred between traditional TV networks and newfangled options like Netflix. More

China's central bank surprised investors last week with its first rate cut in more than two years. But get used to that -- analysts say more cuts are in the pipeline. More

Regin is malware has been lurking in computers for as long as six years, according to Symantec. But experts don't know much about where it is from, what it does and who has been targeted. More

Obama doesn't have the authority to create a startup visa, but part of his reform announcement could include a workaround for entrepreneurs: 'parole status.' More

Nearly half of all Americans say there's a chance they'll have to work during a holiday between Thanksgiving and New Year's, according to a new poll. And one in four say they'll have to work whether they want to or not. More

Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer.

Morningstar: © 2014 Morningstar, Inc. All Rights Reserved.

Factset: FactSet Research Systems Inc. 2014. All rights reserved.

Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved.

Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor’s Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2014 and/or its affiliates.