Treasuries Rise as Benchmark 10-Year Yield Near 6-Month High Spurs Buying

Treasuries pared advances after the Federal Reserve purchased less seven-year debt today under its program of quantitative easing than some investors expected.

“The Fed still bought a lot of the sector, but there was more expectation,” said Brian Edmonds, head of interest rates in New York at Cantor Fitzgerald LP, one of 18 primary dealers that trade with the Fed. “We are mulling around near yesterday’s levels and seeing where the day takes us.”

The yield on the 10-year note fell two basis points, or 0.02 percentage point, to 3.26 percent at 11:23 a.m. in New York, according to BGCantor Market Data. The price of the 2.625 percent security maturing in November 2020 rose 1/8, or $1.25 per $1,000 face amount, to 94 21/32. The yield earlier dropped seven basis points to 3.20 percent.

The 10-year note yield increased 35 basis points over the past two days in the biggest such gain since Sept. 19, 2008, when markets were in upheaval following the bankruptcy of Lehman Brothers Holdings Inc. The yield touched 3.33 percent yesterday, the highest level since June 4.

To contact the reporter on this story: Cordell Eddings in New York at ceddings@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Dec. 9 (Bloomberg) -- Edward Yardeni, president and chief investment strategist at Yardeni Research Inc., discusses the U.S. bond market. Yardeni speaks from London with Erik Schatzker, Deirdre Bolton and Sara Eisen on Bloomberg Television's "InsideTrack." (Source: Bloomberg)

Dec. 9 (Bloomberg) -- George Goncalves, managing director for Nomura Holdings Inc., talks about the outlook for Treasuries and Federal Reserve monetary policy. Goncalves speaks with Erik Schatzker on Bloomberg Television's "InsideTrack." (Source: Bloomberg)