Treasuries fall after central banks coordinate to cut swap rate

Treasuries fell after the Federal Reserve and five other central banks agreed to reduce the interest rate on dollar liquidity swap lines by 50 basis points and extend their authorization through Feb. 1, 2013.

“It should provide short-term liquidity to the system again,” said John Fath, a principal at the investment firm BTG Pactual in New York who helps manage $2.5 billion. “The central banks globally are on top of it. They don’t want to see another liquidity crisis like 2008.”

The benchmark 10-year yield rose five basis points, or 0.05 percentage point to 2.04 percent at 8:08 a.m. New York time, according to Bloomberg Bond Trader prices. The 2 percent security due in November 2021 fell 14/32, or $4.38 per $1,000 face amount, to 99 21/32.