- The Washington Times - Monday, March 30, 2009

NEW YORK (AP) - Treasury prices mostly advanced Monday as worries about the stability of General Motors Corp. and Chrysler LLC sent stocks tumbling.

Concerns about the financial industry also drove demand for the safety of government debt after Treasury Secretary Timothy Geithner said Sunday some banks struggling with bad loans likely would need more money.

Worries about an automaker bankruptcy have been dogging investors for months. Over the weekend, President Barack Obama refused further long-term federal bailouts for GM and Chrysler, saying the companies needed to wring more concessions from unions, creditors and others before the government would approve more money. He raised the possibility of controlled bankruptcy for one or both of the companies. The government also forced out GM chief executive Rick Wagoner.

The Dow Jones industrial average tumbled 254 points Monday, though it ended off its lows after being down more than 300 points.

The drop in stocks helped feed demand for Treasurys. Prices have mostly been rising since the Federal Reserve decided in mid-March it would start buying government debt.

On Monday, the benchmark 10-year Treasury note rose 12/32 to 100 8/32. Its yield fell to 2.72 percent late Monday from 2.76 percent late Friday. Prices move opposite to yields.

The two-year note rose 4/32 to 100 2/32, and its yield fell to 0.85 percent from 0.92 percent, according to BGCantor Market Data.

The 30-year bond rose 8/32 to 98 5/32, and its yield fell to 3.60 percent from 3.62 percent.

The yield on the three-month Treasury bill, considered one of the safest investments, rose to 0.18 percent from 0.12 percent. The discount rate was 0.19 percent. The yield on the one-month T-bill stood rose to 0.04 percent from zero on Friday.

The cost of lending between banks fell. The British Bankers’ Association said the London Interbank Offered Rate, or Libor, on three-month loans in dollars fell to 1.21 percent Monday from 1.22 percent Friday. Libor is down from its peak last October, but still above its mid-January low of 1.08 percent.

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