Treasuries ease after Tuesday’s plunge

NEW YORK (CNNMoney) — After unrest in Libya sent bond yields tumbling the day before, Treasury yields are holding steady near three-week lows Wednesday.

The benchmark 10-year note traded at a yield of 3.49% Wednesday morning, a mere fraction higher than the 3.45% low it reached Tuesday.

Meanwhile, the 30-year yield was flat at 4.60%, the 2-year yield ticked up to 0.77% and the 5-year yield inched up to 2.16%.

Uprisings throughout the Middle East and North Africa have spurred investors into safe-haven assets like U.S. Treasuries recently, sending yields on those bonds falling.

The 10-year note had rallied as high as 3.72%, before protests erupted in Libya nine days ago.

Protestors there are demanding an end to dictator Moammar Gadhafi’s 42-year reign and high unemployment in the country, following political uprisings in Egypt and Tunisia.

But unless any significant developments turn up the heat even more there, traders expect to see bond yields wobble around Tuesday’s levels.

“There’s still a lot of tension and uncertainty in the Middle East, but for now, the bond market has lightened up a bit,” said Kim Rupert, a fixed income analyst with Action Economics.

The Treasury Department is scheduled to auction off $35 billion in 5-year notes Wednesday. Ahead of large government sales, traders often try to push bond prices lower to get the best deal at auction, and that price pressure sends yields slightly higher.

The government auctioned off $35 billion in 2-year notes on Tuesday and is scheduled to issue $29 billion of 7-year notes on Thursday. 

First Published: February 23, 2011: 9:18 AM ET