Treasuries fell, pushing the yield on the 10-year note to the highest level since
December, after the government said the U.S. economy grew in the first quarter at a
faster pace than it originally estimated. U.S. debt dropped before the Treasury's $19
billion auction of five-year notes, following a $30 billion sale of two-year securities that
attracted tepid demand. Dallas Fed President Richard Fisher said yesterday the
central bank will probably raise the target lending rate if the public's inflation
expectations increase. The yield on the 10-year note rose 7 basis points to 4.07
percent at 9:20 a.m. in New York, according to BGCantor Market Data. It touched 4.08
percent, the highest level since Dec. 28. The price of the 3.875 percent security
maturing in May 2018 dropped 18/32, or $5.63 per $1,000 face amount, to 98 14/32. It
touched 2.77 percent, the highest since Jan. 8. Gross domestic product expanded at
an annual rate of 0.9 percent from January through March, compared with an initial
estimate of 0.6 percent, the Commerce Department said in Washington. The market is
.125 to .375 worse in discount this morning.
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