Treasurys fall as supply builds

Prices for government debt dip with a record auction, including $22 billion of 7-year notes.

EMAIL  |   PRINT  |   SHARE  |   RSS
google my aol my msn my yahoo! netvibes
Paste this link into your favorite RSS desktop reader
See all RSS FEEDS (close)
By Ben Rooney, staff writer

When will the economy begin to turn around?
  • Later this year
  • Early next year
  • Late in 2010
  • In 2011 or after

NEW YORK ( -- Treasurys fell Thursday as the government auctioned off a record amount of debt this week and President Barack Obama outlined a budget that called for more spending.

The Treasury Department auctioned $22 billion in 7-year notes as part of a record $94 billion debt offering over three days. The market absorbed $32 billion of 5-year notes Wednesday and $40 billion in 2-year bills Tuesday.

The auctions come as federal spending explodes. The government is set to pay $787 billion for stimulus, $700 billion for the bank bailout and trillions more in various liquidity programs.

Meanwhile, the budget Obama unveiled for fiscal 2010 projects a deficit of $1.75 trillion. It also included provisions for up to $250 billion in additional aid for the banking system.

Obama has pledged to reduce the deficit he inherited to $533 billion by 2013.

"Supply concerns continue to weigh on the market," said Peter Cardillo, chief market strategist at Avalon Partners in New York.

Thursday's retreat comes despite a raft of bad economic news.

New home sales plunged to an all-time low in January and the number of Americans filing new claims for unemployment hit a 26-year high last week.

Separately, ailing automaker GM reported a $9.6 billion loss in the fourth quarter, highlighting the challenges facing the nation's auto industry.

Bad economic news typically drives Treasury prices higher, as investors flock to the safety of government debt. But the flood of supply outweighed safe-haven demand.

Bond prices: The benchmark 10-year note fell 14/32 to 98 1/32 and its yield rose to 2.98% from 2.95% on Wednesday. Bond prices and yields move in opposite directions.

The 5-year note was lower, yielding 2.08%, higher than the 1.98% awarded at Wednesday's auction.

The 30-year bond was down 1-2/32 at 97 10/32, and its yield rose to 3.65%.

The yield on the 3-month note stood at 0.27%, down from 0.3% on Wednesday's level. Demand for the shorter term note is seen as a gauge of investor confidence.

Lending rates: The 3-month Libor rate was unchanged from Wednesday at 1.26%, and the overnight Libor rate rose to 0.28% from 0.27%, according to

Libor, the London Interbank Offered Rate, is a daily average of rates that 16 banks charge each other to lend money in London.

Two credit market gauges suggested market conditions were improving. The TED spread fell to 0.96 percentage point, down slightly from 0.97 on Wednesday. The larger the TED spread, the less willing investors are to take risks.

The Libor-OIS spread sank to 1.01 percentage points from 1.02 points Wednesday. The smaller the spread, the more cash is available for banks to lend. To top of page

They're hiring!These Fortune 100 employers have at least 350 openings each. What are they looking for in a new hire? More
If the Fortune 500 were a country...It would be the world's second-biggest economy. See how big companies' sales stack up against GDP over the past decade. More
Sponsored By:
More Galleries
10 of the most luxurious airline amenity kits When it comes to in-flight pampering, the amenity kits offered by these 10 airlines are the ultimate in luxury More
7 startups that want to improve your mental health From a text therapy platform to apps that push you reminders to breathe, these self-care startups offer help on a daily basis or in times of need. More
5 radical technologies that will change how you get to work From Uber's flying cars to the Hyperloop, these are some of the neatest transportation concepts in the works today. 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: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. 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 2018 and/or its affiliates.