Treasurys mostly higher after auction
Government sells $28 billion in 7-year notes as part of a record weekly debt offering totaling more than $200 billion.
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NEW YORK (CNNMoney.com) -- Treasury prices were mostly higher Thursday after the government sold $28 billion in 7-year notes and stocks surged to a 9-month high.
The government took in $73.5 billion worth of bids for the $28 billion in 7-year notes offered, for a bid-to-cover ratio of 2.6.
A ratio above 2 is generally considered a sign of healthy demand, but Thursday's results were slightly weaker than June's auction of the same duration.
The indirect bid, which reflects participation by overseas buyers, totaled $17.4 billion in Thursday's auction.
"The rumor is that Asian central banks bought big," said Kevin Giddis, managing director of fixed income at Morgan Keegan.
"The takeaway is that there's still a lot of foreign demand for U.S. Treasurys," Giddis said. "Beyond that, the market's reaction is a bit muted because of the stock market."
The government received lukewarm demand for the $39 billion in 5-year notes it sold Wednesday. That came after a $42 billion sale of 2-year notes on Tuesday.
The auctions are part of a record weekly debt offering totaling more than $200 billion. The government also sold $90 billion in short-term bills and $6 billion in Treasury Inflation Protected Securities, or TIPS, this week.
As the government floods the market with debt to fund a growing deficit, many analysts say that demand for Treasurys could be overwhelmed.
Meanwhile, stocks rallied to their highest levels since November as investors focused on improved corporate results and a economic report that suggested the job market is starting to stabilize.
The rise in stock prices suggests that investors are more inclined to take risks, which often drives down prices for ultra-safe U.S. Treasurys.
Bond prices: The benchmark 10-year note was up 14/32 to 96-1/32 and yielded 3.61%, down from 3.67% Wednesday. Bond prices and yields move in different directions.
The 30-year bond gained 1-15/32 to 97-8/32 and its yield eased to 4.42% from 4.52%.
The 5-year note edged up less than 1/32 to 99-31/32 and its yield was 2.64%.
The 2-year note dipped less than 1/32 to 99-21/32, and its yield was 1.18%.
The yield on the 3-month note was 0.18%. 
