Treasurys fall after auction

By Annalyn Censky, staff reporter


NEW YORK (CNNMoney.com) -- Treasurys fell after a government auction of $44 billion in 2-year notes Tuesday, the first of three auctions totaling $118 billion this week.

What prices are doing: After the auction, the 2-year note was flat, but other Treasurys fell. The 2-year closed at 99-26/32 with a yield of 0.99%. The 5-year note fell 2/32 to 99-25/32 and its yield rose to 2.42%. Bond prices and yields move in opposite directions.

10yearyield.mkw.gif
Click the chart for the latest prices and yields.

The benchmark 10-year note fell 8/32 to 99-16/32 and its yield rose yield of 3.69%. The 30-year bond fell 17/32 to 100-10/32 with a yield of 4.60%.

What's moving the market: In the first auction of the week, investors submitted bids totaling nearly $131.6 billion for $44 billion worth of 2-year notes.

The bid-to-cover ratio, a measure of demand, was 3 -- down slightly from 3.33 at the previous auction in February.

Auctions later this week include a $42 billion issue of 5-year notes on Wednesday and $32 billion in 7-year notes on Thursday.

Stocks rallied Tuesday, with the Dow, Nasdaq and S&P 500 hitting new 18-month highs following the release of a better-than-expected existing home sales report.

What analysts are saying: Treasury prices may have been little changed by the auction, but fell on the long end because of major stock market gains, said Ken Naehu, managing director and head of fixed income at Bel Air Investment Advisors.

Demand for Treasurys could inch up more due to lingering concern about the Greek debt crisis, said David Coard, head of fixed income at The Williams Capital Group. The dollar edged up on the euro and the British pound Tuesday based on those same concerns.

Investors are worried that the European Union will not agree on a rescue package for Greece at a summit this week. Those worries, Coard said, have resulted in modest "flight-to-quality bids" -- Wall Street lingo meaning investors sell what they perceive to be higher risk investments such as stocks, opting instead to purchase lower risk investments such as government-backed U.S. Treasurys. To top of page

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