Treasurys mixed after Fed purchase
Prices for longer term bonds edge higher while 2-year notes fall after the Federal Reserve buys another $6 billion in Treasurys.
NEW YORK (CNNMoney.com) -- Treasurys were mixed Wednesday, with longer term bonds gaining, after the Federal Reserve held its fourth purchase operation.
The central bank said it bought another $6 billion in government debt as part of its plan to buy $300 billion in Treasurys over the next few months. By purchasing Treasurys, the Fed hopes to drive down interest rates on consumer and business loans to jolt the economy.
The Fed has purchased $23.5 billion worth of Treasurys since its first operation on March 5. Wednesday's buy included bonds that mature between May 2012 and May 2013. Nearly $17 billion was submitted in response to the operation.
Meanwhile, stocks turned higher in afternoon trade as investors responded to a raft of mixed economic data.
"I think the fortunes of the stock market will probably dictate any moves we see later in the day," said Steve Van Order, chief fixed income strategist at Calvert Funds.
Stocks opened sharply lower after a grim reading on the labor market. But the major indexes recovered after a key measure of manufacturing activity rose more than expected. The Dow Jones industrial average ended the day 150 points higher.
The Institute for Supply Management's index of manufacturing activity rose to 36.3 in March, up from 35.8 the previous month. It was the third consecutive monthly increase.
Meanwhile, a report from payroll-processing firm Automatic Data Processing said the private sector lost a seasonally adjusted 742,000 jobs in March. The larger-than-expected loss raised concerns about the government's closely watched monthly jobs report due out Friday.
But a separate report from outplacement firm Challenger, Gray & Christmas Inc. suggested the pace of planned job cuts may be slowing. (Full story)
Demand for U.S. bonds, which are considered one of the most secure assets available, often falls when equities rise as investors' appetite for risk outweighs the need for safety.
Bond prices: The benchmark 10-year note was up 4/32 at 100 27/32, and its yield was unchanged from Tuesday at 2.66%. Bond prices and yields move in opposite directions.
The 30-year bond rose 20/32 to 100, and its yield held steady at 3.5%.
The 2-year note slid 1/32 to 100 4/32, and its yield was 0.82%.
The 3-month bill yielded 0.21%.
Lending rates: The 3-month Libor rate was 1.18%, down from Tuesday's level of 1.19%, according to Bloomberg.com. The overnight Libor rate fell to 0.3% after spiking to 0.51% on quarter-end portfolio adjusting.
Libor, the London Interbank Offered Rate, is a daily average of rates that 16 different banks charge each other to lend money in London.
Two credit market gauges narrowed Tuesday. The "Ted" spread fell to 0.97 percentage point from 0.98 point on Tuesday. The narrower the Ted spread, the more willing investors are to take risks.
The Libor-OIS spread slipped to 0.96 percentage point from 0.97 percentage point. The narrower the spread, the more cash is available for lending. 
