Treasuries are showing significant strength in morning trading on Monday, as investors move into the safety of government backed bonds amid continued earnings anxiety on Wall Street.
As the influx of earnings reports continues, traders digested news that General Motors (GM) has been told to prepare for a bankruptcy filing by the U.S. Treasury Department, further prompting moves into guaranteed returns.
The benchmark ten-year note has shown a notable upward move in the early going, moving firmly into positive territory. Subsequently, the yield on the note has fallen to 2.863 percent, a fall of 6.3 basis points on the day.
Investors sought security in their investments as they considered dim prospects for one of the nation's largest car manufacturers.
The Treasury Department is directing General Motors Corp. toward a bankruptcy filing by a June 1st deadline, the New York Times reported, citing unidentified people with knowledge of the plans.
The report specified that one plan under consideration would create a new company that would buy the good assets of the company almost immediately after the carmaker files for bankruptcy.
Later this morning, some investors will look to the Treasury Department's announcements regarding upcoming securities auctions aimed at funding the government's record spending measures.
The government is scheduled to reveal details of its upcoming sale of 4-week bills at 11 a.m. ET, while holding standard sales for short-term securities later in the day.
At 1 p.m. ET, the Treasury Department will hold an auction for $28.0 billion worth of 3-month bills scheduled to mature July 16th, 2009.
The previous auction of $30.0 billion worth of 3-month bills drew a high yield of 0.200 percent. The sale saw stronger than usual demand, with the bid-to-cover ratio coming in at a level of 3.43.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The Treasury also plans to auction $27.0 billion worth of 6-month securities at the same time as the 3-month offering.
In the previous auction, the government sold $28.0 billion worth of 6-month bills, with the auction drawing a high-yield of 0.400 percent and a bid-to-over ratio of 3.33.
In other treasury news this morning, the New York Federal Reserve plans to continue its purchase of long-term bonds, set to buy treasuries maturing between March of 2011 and April of 2012.
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