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U.S. sells $21B in 10-year notes at lowest rates since Jan. 2009

NEW YORK — Who’s worried about ballooning federal debt? Apparently not bond investors. The Treasury Department sold $21 billion in 10-year notes on Wednesday at the lowest rate since January 2009.

The auction of 10-year notes fetched a 2.67 percent yield, as buyers placed bids for 3.21 times the amount offered. The next-lowest yield at an auction of 10-year notes came in January 2009, in the midst of the financial crisis.

Wednesday’s sale was the second of three Treasury auctions expected to raise a total of $67 billion this week. On Tuesday, the government sold $33 billion in three-year notes at a record low rate of 0.79 percent.

So why are the world’s investors so eager to lend to the U.S. government? It’s a reflection of the turbulent times. The more pessimistic the prospects for economic growth, the more appealing safer bets like U.S. bonds look, even though the government’s budget deficit may top $1.3 trillion this fiscal year.

Fears of a “double-dip” recession have spurred investors to buy bonds, raising their prices and lowering their yields. The auction’s results fit this recent trading trend, said Dan Greenhaus, Miller Tabak’s chief economic strategist, in a note to clients.

“The Treasury Department has had little if any difficulty in bringing its debt to market despite budget, debt, deficit and interest rate concerns,” he said. “If the bond market is to be believed, these really aren’t concerns at all.”

The 10-year yield ended the trading day at 2.66 percent, up from 2.60 percent on Tuesday. Its price fell 59 cents to $99.65.

In other trading, the two-year note dropped 6 cents to $99.81 to yield 0.52 percent. The 30-year slid $1.34 to $102.5, yielding 3.74 percent. Traders expect the long bond to fall further tomorrow ahead of the Treasury’s planned sale of $13 billion in 30-year bonds.

The yield on the three-month T-bill was unchanged at 0.12 percent. Its discount was 0.13 percent.