Published: July 03, 2009 12:47 pm      

Treasury prices mixed amid increased risk appetite

NEW YORK — Treasury prices were mixed Wednesday as investors' appetite for risk increased.

A decline in long-term Treasurys pushed the yield on the benchmark 10-year note up slightly to 3.56 percent in afternoon trading from 3.54 percent late Tuesday. Prices for short-term Treasurys rose.

The mixed trade came as stocks climbed amid reports showing an improvement in manufacturing activity, both in the U.S. and abroad. Demand for government debt tends to fall off when stocks rise, as investors look for higher returns in riskier assets.

Bonds, however, found some support from the buying of Treasurys by the Federal Reserve. The Fed bought about $3 billion worth of government debt on Wednesday having maturities ranging from 10 to 17 years. The central bank has committed to buying Treasurys this year in an effort to offset the massive amounts of debt the government is issuing to fund its stimulus programs.

Worries that such large amounts of debt would be met with weak demand drove yields on long-term Treasurys to their highest levels of the year in June. But some of those fears have eased as auctions attract solid demand.

In afternoon trading, the 10-year Treasury note's price fell 7/32 to 96 12/32.

The 30-year bond's yield rose to 4.36 percent from 4.34 percent. Its price fell 15/32 to 98 6/32.

The two-year note's yield fell to 1.08 percent from 1.13 percent, and its price rose 3/32 to 100 3/32.

The three-month T-bill's yield was at 0.16 percent from 0.18 percent late Tuesday.