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Treasury sells 10-year notes at record low yield as buyers pour in

The continuing global stock market panic is the gift that keeps on giving to the U.S. Treasury.

Despite the U.S. credit-rating downgrade by Standard & Poor's last week, the Treasury on Wednesday saw huge demand when it sold $24 billion in new 10-year notes.

Treasury notes The notes sold at a yield of 2.14%, a record low for any 10-year auction. The yield on the previously issued 10-year note (charted at left) fell to 2.16% from 2.26% on Tuesday.

With stocks worldwide in another free fall, and worries soaring again about Europe's debt crisis, money keeps pouring into Treasuries as a haven. Many investors clearly don't care, at this point, that S&P rates U.S. bonds AA+ instead of AAA.

Market yields slid again Wednesday on Treasuries across the board. The five-year T-note fell to 0.92% from 1.00% on Tuesday. The 30-year T-bond fell to 3.54% from 3.62%.

Demand for longer-term bonds was stoked in part by the Federal Reserve's grim assessment of the economy, issued Tuesday, and policymakers' indication that they expected to keep short-term interest rates near zero for at least two more years.

That's encouraging investors to lock in longer-term yields.

The Treasury will wrap up this week's debt sales with an auction of $16 billion in 30-year bonds on Thursday.

-- Tom Petruno

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