Treasury sells 10-year notes at record low yield as buyers pour in

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The continuing global stock market panic is the gift that keeps on giving to the U.S. Treasury.

Despite the U.S. credit-rating downgrade by Standard & Poor’s last week, the Treasury on Wednesday saw huge demand when it sold $24 billion in new 10-year notes.


The notes sold at a yield of 2.14%, a record low for any 10-year auction. The yield on the previously issued 10-year note (charted at left) fell to 2.16% from 2.26% on Tuesday.

With stocks worldwide in another free fall, and worries soaring again about Europe’s debt crisis, money keeps pouring into Treasuries as a haven. Many investors clearly don’t care, at this point, that S&P rates U.S. bonds AA+ instead of AAA.

Market yields slid again Wednesday on Treasuries across the board. The five-year T-note fell to 0.92% from 1.00% on Tuesday. The 30-year T-bond fell to 3.54% from 3.62%.

Demand for longer-term bonds was stoked in part by the Federal Reserve’s grim assessment of the economy, issued Tuesday, and policymakers’ indication that they expected to keep short-term interest rates near zero for at least two more years.

That’s encouraging investors to lock in longer-term yields.

The Treasury will wrap up this week’s debt sales with an auction of $16 billion in 30-year bonds on Thursday.

-- Tom Petruno


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