Treasurys dip on lower than expected Fed buying

The Associated Press
Wednesday, March 23, 2011; 5:23 PM

NEW YORK -- Treasury prices slipped Wednesday after the Federal Reserve bought less debt than expected on the open market.

Worries over the fiscal crises in Portugal and Ireland had sent Treasury prices higher in earlier trading. The prices fell after the New York Fed bought just $7.56 billion in debt, just 25 percent of the $30.76 billion offered by dealers.

The price of the 10-year Treasury note fell 18.75 cents for every $100 invested. That pushed the yield to 3.36 percent from 3.33 percent late Tuesday. Bond yields rise when prices fall.

The central bank's purchase was part of its $600 billion bond-buying program launched in November to support the economy.

Meanwhile, investors continued to anticipate Europe's debt crisis to worsen.

Portugal's prime minister quit late Wednesday as lawmakers defeated the government's proposal for more austerity measures, casting further uncertainty over the debt-stressed country's ability to avoid a bailout.

In Ireland, the results of stress tests next week will reveal the true extent of capital needs at the countries' struggling banks.

Investors doubt the two countries will be able to cut their borrowing loads through austerity measures alone.

The 30-year bond was off by 31.25 cents, which send the yield up to 4.46 percent from 4.44 percent from the day before.

In the market for short-term Treasury bills, the three-month T-bill paid a 0.08 percent yield. Its discount was 0.09 percent.

© 2011 The Associated Press