Treasuries rose on Monday after the Federal Reserve moved to add liquidity to the credit and financial markets with a pair of moves over the weekend and aid for struggling investment bank Bear Stearns.
On Sunday evening, the Federal Reserve said it would lower the rate it charges banks for direct loans from 3.5 percent to 3.25 percent. It also said it would extend lending to securities companies under terms which had been previously reserved for banks.
On Friday, the Fed indirectly provided a $30 billion loan to investment bank Bear Stearns through rival JPMorgan Chase. On Sunday, JPMorgan said it would buyout Bear Stearns for less than a tenth of its market value.
Investors have been anticipating that the Fed will reduce another key lending rate during its policy setting meeting tomorrow.
Meanwhile, a report released today by the New York fed indicated that industrial output fell more than expected in February. Output fell 0.5 percent in the month to a record low.
Ten year treasury notes rose 1- 4/32 in price to yield 3.39 percent at 3:33 p.m. in New York compared to 3.47 percent late Friday. Two year notes were up 7/32 in price to yield 1.37 percent compared to 1.49 percent.