Slow US growth as yields hit record low

US TREASURY two-year notes rose yesterday, pushing yields to a record low, after Federal Reserve officials said economic growth is “considerably slower” and the Treasury’s sale of $32 billion in three-year notes drew stronger-than-average demand in the first note sale since Standard & Poor’s cut the US debt rating on August 5.

Yields on 10-year notes erased gains as policy makers left their target interest rate in a range of zero to 0.25% and pledged to keep it there through mid-2013.

The Federal Open Market Committee discussed a range of policy tools to bolster the economy and said it is “prepared to employ these tools as appropriate,” it said in a statement today in Washington. The notes drew a yield of 0.5%, a record low at auction. The bid-to-cover ratio, a gauge of demand was 3.29, compared with an average of 3.15 for the past 10 sales.