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Originally published Tuesday, June 26, 2012 at 10:54 AM

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Treasury auction of 2-year notes draws weak demand

A government auction of $35 billion in two-year notes drew weak demand from investors Tuesday, a sign that their thirst for safe investments might be sated for now.

The Associated Press

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A government auction of $35 billion in two-year notes drew weak demand from investors Tuesday, a sign that their thirst for safe investments might be sated for now.

The Treasury Department auctioned the notes to yield 0.313 percent. That's slightly higher than the yield fetched by similar notes being traded on the open market at the time, according to data from CRT Capital Group LLC. A higher yield suggests weak interest in the auction.

Another sign of weakness: relatively few bids were cast for every note sold compared to recent two-year auctions, CRT said.

Demand for most Treasurys had risen strongly Monday as fear about Europe's debt crisis caused traders to sell stocks. As stocks regained their balance Tuesday, demand for Treasurys dropped off.

The yield on the 10-year Treasury note rose to 1.63 percent late Tuesday from 1.61 percent late Monday. Its price fell 22 cents for every $100 invested. The yield was as high as 1.64 percent earlier Tuesday.

The price of the 30-year Treasury bond fell 44 cents per $100 invested, pushing its yield up to 2.70 percent from 2.69 percent late Monday.

After the auction, the yield on the two-year Treasury note rose to 0.32 percent from 0.30 percent late Monday.

The yield on the three-month Treasury bill rose to 0.09 percent from 0.08 percent.

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