Bond Prices Hold Steady After Successful Auction

SARA LEPRO

NEW YORK (AP) — Government bonds were little changed Monday as soaring stock prices chipped away at demand for Treasurys after a successful auction of three-year notes.

Treasury prices rose initially after the $40 billion auction, but by late afternoon were off their highs as stocks surged to their best levels of the year.

A weak dollar was driving investors to buy riskier assets like stocks and commodities, which can generate bigger returns.

The Treasury auction also benefited from the falling dollar, which gave foreign investors more buying power. Foreign bidders purchased 68.5 percent of the notes.

The bid-to-cover ratio, a measure of demand, was 3.33, up from 2.76 at a similar auction last month. It was the strongest demand garnered by an auction of three-year notes since 1993, said Tom di Galoma, head of U.S. rates trading at Guggenheim Partners, a brokerage for institutional investors.

After the auction, the three-year note held steady at 100 1/32. Its yield fell to 1.36 percent from 1.37 percent late Friday. It stood at 1.37 percent in late trading.