- The Washington Times - Friday, March 20, 2009

NEW YORK (AP) - Treasurys fell again Friday after surging on the Federal Reserve’s midweek announcement that it would buy $300 billion in government debt.

Treasury prices spiked following the Fed’s announcement on Wednesday but then eased Thursday and Friday. The drop in prices also came ahead of government plans to sell more debt next week.

On Wednesday, investors pushed the yield on the benchmark 10-year note to its biggest one-day decline in decades. Prices move opposite to yields.

The Fed also said it would increase its potential purchases of mortgage-backed securities by $750 billion to $1.25 trillion and agency debt by $100 billion to $200 billion.

While many investors welcomed the move, the announcement weighed on the dollar and stoked worries about inflation.

As the Dow Jones industrial average fell 122 points Friday, the 10-year Treasury note fell 10/32 to 100 31/32. Its yield rose to 2.64 percent from 2.60 percent late Thursday. That’s still well below Tuesday’s yield of 3.01 percent.

The two-year note slipped 1/32 to 99 31/32, and its yield rose to 0.88 percent from 0.87 percent.

The 30-year bond fell 6/32 to 96 31/32, and its yield rose to 3.67 percent from 3.62 percent, according to BGCantor Market Data.

The yield on the three-month Treasury bill, considered one of the safest investments, rose to 0.19 percent from 0.18 percent. The discount rate was 0.20 percent.

The cost of lending between banks fell Friday. The British Bankers’ Association said the London Interbank Offered Rate, or Libor, on three-month loans in dollars fell to 1.22 percent from 1.23 percent Thursday. Libor is down significantly from its peak last October, but still above its mid-January low of 1.08 percent.

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