Interest rates edge higher to end week as investors risk appetite grows

Friday, September 10, 2010

Interest rates climb for 3rd straight day

NEW YORK — Investors opted for riskier assets Friday, moving out of the safety of Treasurys after another sign of economic expansion.

Interest rates rose as bond prices fell slightly in a very light day of trading.

Traders preferred stocks to bonds for the third straight day after the Commerce Department said wholesale inventories and sales increased sharply in July. It was the latest sign over the past two weeks of burgeoning economic growth.

Money flooded into Treasurys in August when there were fears the economy might fall back into recession. That sent interest rates sharply lower. As investors have gained confidence in September, they’ve moved money out of bonds.

The yield on the 10-year Treasury note, which moves opposite its price, rose to 2.79 percent from 2.76 percent late Thursday. Its yield was 2.42 percent at the end of August, its lowest point this year. The 10-year note’s yield is used to help set interest rates on mortgages and other loans. Its price fell 28.1 cents Friday to $98.50.

In other trading, the yield on the 30-year note rose to 3.87 percent from 3.84 percent as the price on the note maturing in August 2040 fell 40.6 cents to $100.093.

The yield on the two-year note held tight at 0.57 percent late Friday, unchanged from the day before. The price on the note maturing in August 2012 was $99.594. The three-month T-bill also remained the same at a yield of 0.13 percent. Its discount was 0.14 percent.

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