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Treasury prices jump as stocks fall for 2nd day

Interest rates dropped in the bond market for a second straight day Thursday as President Barack Obama said he wants to place restrictions on big banks.
/ Source: The Associated Press

Interest rates dropped in the bond market for a second straight day Thursday as President Barack Obama said he wants to place restrictions on big banks.

The proposal brought concerns from investors that the changes could hurt profits. The slide in stocks increased demand for the safety of government debt. Yields slid as Treasury prices jumped.

The yield on the 10-year Treasury note that matures in November 2019, which is a benchmark for interest rates on mortgages and other consumer loans, dropped to 3.59 percent in late trading from 3.65 percent late Wednesday. Its price rose 17/32 to 98 8/32.

The Dow Jones industrial average fell 213 points, putting its two-day loss at 336 points, or 3.1 percent. The fall marks the steepest percentage drop over two days since mid-June. Stocks fell Wednesday after China said it would curb bank lending to slow its economy.

Treasury prices also advanced Thursday following an unexpected increase in unemployment claims. The Labor Department said the number of workers seeking unemployment benefits for the first time rose by 36,000 to 482,000 last week. Economists surveyed by Thomson Reuters predicted a modest drop. The four-week average, a less volatile reading, rose for the first time since August.

The yield of the 30-year bond that matures in November 2039 dropped to 4.49 percent from 4.54 percent, while its price advanced 25/32 to 98 4/32.

The yield on the two-year note maturing in December 2011 fell to 0.83 percent from 0.88 percent and its price rose 3/32 to 100 10/32.

The yield on the three-month T-bill that matures April 22 was flat at 0.04 percent. Its discount rate was 0.05 percent.