Treasurys higher on Fed's $600B stimulus plan

The Associated Press
Thursday, November 4, 2010; 6:09 PM

NEW YORK -- Short-term U.S. Treasury prices climbed higher Thursday, a day after the Federal Reserve announced a $600 billion bond-buying plan.

The central bank on Wednesday said it would buy $75 billion in Treasurys each month through next June. Its main target are bonds maturing between two and ten years. The Fed hopes to boost the economy by lowering interest rates and offer businesses and consumers more incentive to borrow and spend.

Yields on short-term Treasurys are trading near record lows. The yield on the two-year note reached 0.33 percent, down from 0.34 percent the previous day.

The yield on the five-year note traded at 1.02 percent, down from 1.11. The yield on the 10-year hit 2.47 percent, compared with 2.58 percent the previous day. The note maturing in 2020 jumped 84.3 cents.

The 30-year bond rose 31.2 cents, pushing the yield to 4.03 percent.

The Fed's latest effort is on top of the roughly $35 billion a month its already spending by reinvesting money from mortgage bonds into Treasurys. On Thursday, the central bank used proceeds from mortage bonds to buy $4.7 billion in Treasurys coming due in the next four to six years.

In the Treasury bill market, the three-month T-bill paid a 0.11 percent yield at a discount of 0.12 percent.

© 2010 The Associated Press