Treasurys mixed after 10-year note sale

• By Ben Rooney, CNNMoney.com staff reporter
• On 1:44 pm EST, Tuesday November 10, 2009

Treasurys were mixed Tuesday after the most recent auction in this week's record $81 billion offering of U.S. debt drew strong demand.

"Despite record supply and concern about out-of-control government spending, the Treasury continues to be able to borrow on favorable terms," said Dan Greenhaus, chief economic and bond strategist at Miller, Tabak & Co in New York.

This week's auction was the latest in a string of record-sized debt sales that the government has held this year to help fund its economic stimulus efforts and a growing budget deficit.

While many analysts worry that the ongoing flood of new issues could eventually undermine demand for Treasurys, investors continue to have a healthy appetite for U.S. debt.

Investors submitted bids totaling almost $70 billion for the $25 billion worth of 10-year notes sold Tuesday.

The bid-to-cover ratio, which measures demand, was 2.81. That compares with a long-term average of 2.34, according to MF Global.

Indirect bidders, a category that includes foreign central banks, bought nearly 47% of the notes.

The government also received strong demand at Monday's $40 billion sale of 3-year notes.

Prices for 30-year notes eased slightly Tuesday as investors brace for Thursday's $16 billion sale of the 30-year bond.

Treasury prices were higher before the auction amid a lack of economic news. Stocks were lower in afternoon trade following a triple-digit rally in the previous session.

The bond market will be closed Wednesday in observance of Veterans Day.

Bond prices. The newly issued 10-year note was priced at 99-6/32 at Tuesday's auction, with a median yield of 3.42%. Prices continued to rise after the auction, with the yield on existing 10-year notes falling to 3.47% from 3.48% late Monday. Bond prices and yields move in opposite directions.

The 2-year note rose 1/32 to 100-10/32 with a yield of 0.85%.

The 30-year bond was unchanged at 101-21/32. Its yield was 4.39%.

Buzz up!