Treasurys give up gains ahead of auctions

By Blake Ellis, staff reporter


NEW YORK (CNNMoney.com) -- Treasurys gave up gains on Tuesday amid choppy trading and as investors focused on the week's upcoming auctions.

What prices are doing: The benchmark 10-year note was unchanged at 100-26/32 and yielded 3.53% from 3.55% on Monday. Bond prices and yields move in opposite directions.

bonds.5.11.png

The 30-year bond was down 1/32 to 103-10/32 with a 4.42% yield. The 2-year note was flat at 100-10/32 with a 0.84% yield. The 5-year note dropped to 101-8/32, yielding 2.24%.

What's moving the market: A volatile stock market on Tuesday boosted the appeal of safer assets in early trading as investors worried that the European rescue package announced over the weekend may not be enough to prevent a debt crisis from spreading across the region.

Because Treasurys are backed by the government, they are viewed as safe alternatives to higher risk assets like stocks.

Stocks closed lower Tuesday after rallying to 14-month highs in the previous session as investors celebrated a $1 trillion aid package aimed at stabilizing the euro and strengthening debt-choked Greece.

The Treasury market gained earlier Tuesday "as investors, one day after the euro zone agreement was announced, seem to be indicating that they aren't convinced that this package is a slam-dunk," Kevin Giddis, president of fixed income capital markets at Morgan Keegan, said in a research note.

In late trading, investors turned their attention to the week's upcoming auction results. On Wednesday, the government will offer $24 billion in 10-year notes, followed by an auction of $16 billion worth of 30-year bonds on Thursday.

Lending rates: Fears about Europe crept into the lending market as well, and bank-to-bank lending rates for 3-month loans ticked higher on Tuesday.

The London interbank offered rate, or Libor, edged up to 0.423% after easing to 0.421% on Monday.

Libor is a daily average of interest rates that 16 London banks charge each other to lend money, and is used as a benchmark to calculate adjustable-rate mortgages and other loans.

Higher Libor rates indicate less lending among banks, while lower levels signal an increasing willingness to lend. To top of page

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Index Last Change % Change
Dow 32,627.97 -234.33 -0.71%
Nasdaq 13,215.24 99.07 0.76%
S&P 500 3,913.10 -2.36 -0.06%
Treasuries 1.73 0.00 0.12%
Data as of 6:29am ET
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Ford Motor Co 8.29 0.05 0.61%
Advanced Micro Devic... 54.59 0.70 1.30%
Cisco Systems Inc 47.49 -2.44 -4.89%
General Electric Co 13.00 -0.16 -1.22%
Kraft Heinz Co 27.84 -2.20 -7.32%
Data as of 2:44pm ET

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