Disappointing British bond sale weighs on U.S. market Treasury prices declined Wednesday before the government sale of a record amount of five-year notes, the second of the week's big note auctions. Notes stayed lower after the Federal Reserve bought $7.5 billion in U.S. securities, the first operation since announcing last week it intended to buy up to $300 billion. Yields on 10-year notes which move inversely to prices, inched up 2 basis points to 2.73%. A basis point is 0.01 percentage point. Two-year-note yields increased 2 basis points to 0.95%. The Treasury Department will accept bids on the $34 billion in five-year notes until 1 p.m. Eastern time. The government received good demand for $40 billion in two-year securities on Tuesday, receiving the most bids for every dollar available since October 2007. On Thursday, it will auction $24 billion in seven-year notes, only the second sale of the maturity in more than a decade. Both the five- and seven-year note amounts are $2 billion more than at the last sale. The New York branch of the Fed, in charge of its market operations, bought $7.5 billion in debt maturing between 2016 and 2019 on Wednesday. Dealers submitted $21.9 billion in debt to be purchased. Its next batch of purchases, of debt maturing in two to three years, will take place on Friday. Other maturities are slated to be bought next week. Also weighing on the U.S. market, Britain's bond sale Wednesday failed to attract enough buyers for the full amount of 40-year gilts offered, the first time that's happened at a regular bond auction since 1995. That surprised many investors, given how well gilts have performed since the Bank of England said it would buy U.K. debt to help buoy its economy, about a week before the Fed announced similar plans. "Participants are rethinking the idea that government buying of debt is a panacea of all ills," said Andrew Brenner, co-head of structured products and emerging markets at MF Global. U.S. data improves On the U.S. economic data front, orders for durable goods unexpectedly rose 3.4% in February, a government report showed. Economists surveyed by MarketWatch expected orders to decline 1.2%. See more on durable goods report. A separate report showed sales of new homes nationwide rebounded by 4.7% in February after hitting a record low in the prior month. Sales of new homes rose to a seasonally adjusted annual rate of 337,000 last month, higher than the 323,000 that economists surveyed by MarketWatch had expected. See new home sales story.

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