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Treasuries Rise as Geithner Fails to Offer Details on Bailout
By Susanne Walker and Dakin Campbell
Feb. 11 (Bloomberg) -- Treasuries rose as Treasury Secretary Timothy Geithner failed for a second day to provide more details on his strategy to rescue the banking industry, bolstering the haven appeal of government debt.
Yields fell for a third day as Geithner, testifying to the Senate Banking Committee, defended his strategy of taking time to work out the plan’s details. He said Treasury wants to move “carefully” to build its new rescue programs to avoid the need for “quick departures and changes.” The U.S. prepared to sell a record $21 billion in 10-year notes.
“The Treasury market is catching a bid given the outlook for the economy and financial system,” said Gary Pollack, who helps oversee $12 billion as head of fixed-income trading at Deutsche Bank AG’s Private Wealth Management unit in New York. “It is disappointment over the Treasury secretary’s proposals.”
The yield on the 10-year note dropped three basis points, or 0.03 percentage point, to 2.77 percent at 11:19 a.m. in New York, according to BGCantor Market Data. The price of the 3.75 percent security maturing in November 2018 rose 1/4, or $2.50 per $1,000 face amount, to 108 10/32.
“What Treasuries have been responding to over the last 24 hours is the lack of clarity,” said Andrew Harding, who helps manage $20 billion as chief investment officer for fixed income at Allegiant Asset Management in Cleveland. “The market is thinking the recession will be deeper and longer.”
Treasury 10-year notes advanced the most in almost two months yesterday after Geithner unveiled the bailout package on concern it will prove inadequate.
Investors bid for 2.59 times the amount of debt on offer at the previous 10-year sale on Jan. 8. The average for the past 10 auctions is 2.27. The notes drew a yield of 2.419 percent at last month’s sale.
At yesterday’s record $32 billion sale of three-year notes, the so-called bid-to-cover ratio, a gauge of demand, was 2.67, rising from 2.21 in January. The Treasury will auction $14 billion of 30-year bonds tomorrow.