NEW YORK (AP) - Treasurys fell sharply Monday as another big gain in stocks
encouraged investors to draw more money away from the safety of bonds. A
sweetened buyout deal for Bear Stearns Cos. and better than expected housing
data also lessened the market's appetite for government debt.
JPMorgan Chase & Co. raised its offer for Bear Stearns to $10 a share from
$2 a share -- a move aimed at assuaging Bear Stearns shareholders that now
values the failing investment bank at around $1.19 billion.
Meanwhile, the National Association of Realtors said February sales of
existing homes rose by 2.9 percent -- the first rise after six consecutive
months of declines. Analysts had been predicting another drop.
Treasurys declined as stocks surged on the news, with the Dow Jones
industrial average up more than 200 points.
"My general feeling is that we might have averted some financial crisis --
this liquidity-slash-credit crisis," said Tom di Galoma, head of Treasurys
trading at Jefferies & Co. But he added that economic worries keep escalating,
which could lead investors to move their money back into Treasurys.
"The market will eventually transition from liquidity crisis to economic
crisis," di Galoma said. "The economic backdrop is still pretty weak."
The benchmark 10-year Treasury note fell 1 26/32 to 99 18/32, and yielded
3.55 percent, up from 3.34 percent late Thursday, according to BGCantor Market
Data. U.S. financial markets were closed for Good Friday. Prices and yields move
in opposite directions.
The 2-year note fell 14/32 to 100 10/32, with a yield of 1.83 percent, up
from 1.60 percent late Thursday.
The 30-year long bond fell 2 23/32 to 101 19/32, with a yield of 4.34
percent, up from 4.17 percent.
On Thursday, ahead of the three-day weekend, long-term Treasury prices rose
on worries that a series of uneven economic reports could lead the Federal
Reserve to cut interest rates further. The market is growing concerned that
lower rates, while usually welcomed by bond investors, can accelerate inflation
and erode the value of long-term investments.
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