Treasury yields fall again after sharp drop in home sales renews worries about the economy

Interest rates fall after July home sales plummet

NEW YORK — Interest rates fell again in the Treasury market, sending the yield on the two-year note to another record low, after a sharp drop in sales of existing homes added to worries about the economy.

The yield on the 10-year note continued to hover near levels not seen since March 2009.

The yield on the two-year note fell as low as 0.46 percent early in the day Tuesday before climbing back to 0.48 percent. The rate on the note inched higher following an auction for $37 billion in two-year Treasurys. The highest yield accepted by the government at the auction was 0.498 percent, so two-year notes already trading moved closer to that yield.

The price of the two-year note that matures in July 2012 rose 3.125 cents to $100.281.

The National Association of Realtors said sales of previously occupied homes plunged 27 percent in July to an annual rate of 3.83 million. That’s much worse than the 4.7 million estimate from Thomson Reuters and the lowest rate in 15 years.

Investors spooked about the potential of the economy falling back into recession have been pouring money into Treasurys. That has steadily driven their prices higher and their yields lower.

The yield on the 10-year note, which helps set interest rates on mortgages and other consumer loans, fell to 2.49 percent in late trading from 2.60 percent late Monday. The yield fell as low as 2.47 percent Tuesday morning.

The price of the 10-year note that matures in August 2020 rose $1 to $101.156.

The 10-year note yield is the lowest it’s been since March 2009, when stocks hit their lowest level in 12 years.

In other trading, the yield on the 30-year bond that matures in August 2040 fell to 3.56 percent from 3.66 percent, while its price rose $1.969 to $105.719.

The yield on the three-month Treasury bill was unchanged at 0.15 percent. Its discount was 0.16 percent.