Treasurys trade mixed after upbeat report on US services sector

Tuesday, October 5, 2010

Treasurys mixed after upbeat service sector data

NEW YORK — Investors sold long-dated Treasurys on Tuesday after a report showed that the service sector expanded again in September.

Treasurys with shorter maturities edged higher as traders anticipated more bond purchases from the U.S. Federal Reserve.

The Institute for Supply Management said U.S. service-oriented companies grew slightly faster last month as customer demand improved, boosting optimism about the economy. It was the ninth month of expansion in an industry that is the nation’s predominant job generator.

The 30-year bond fell 71.9 cents to $102.25. Its yield rose to 3.75 percent from 3.71 percent.

In other trading, shorter-dated Treasurys rose as investors hoped for more bond purchases by the Fed. The central bank’s interest rate policy committee’s next meeting is Nov. 2-3.

The price of the 10-year Treasury note edged up 3.1 cents to $101.28, while its yield was flat at 2.48 percent. Bond prices and yields move in opposite directions.

The 10-year note reached its low for the year of 2.42 percent on Aug. 25. The yield is a widely used benchmark for interest rates on mortgages and corporate debt.

The five-year note rose 15.6 cents to $100.22, sending its yield down to 1.20 percent from 1.23 percent. The two-year note was unchanged at $99.91, yielding 0.41 percent.

The three-month T-bill paid a 0.12 percent yield, unchanged from late Monday. Its discount was 0.11 percent.

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