Bonds ease as auto industry gets rescue

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Bonds ease as auto industry gets rescue
Posted: 10:21 AM ET
By Catherine Clifford
CNNMoney.com
NEW YORK (CNNMoney.com) — Government debt prices eased off record highs
Friday, but remained elevated, with still yields hovering near record lows, as
the Bush administration finally granted the auto industry the bailout it was
waiting for.

President Bush a rescue package for General Motors and Chrysler LLC
Friday morning that made $13.4 billion in federal loans available to the
struggling U.S. auto makers almost immediately.

The two automakers have been pleading for the government to grant them a
piece of the bailout pie, but the Senate overturned the initial rescue plan and
the fate of the rescue hung in limbo for weeks.

The United States has been in a recession since the end of December 2007,
and with unemployment levels elevated and job losses continuing to mount, the
economy would have had a very hard time absorbing the millions of job losses
associated with the failure of one of the Detroit Big Three.

The demand for government bonds has been unprecedented in recent weeks as
investors seek a safe haven from volatility in other markets. Government debt
is considered one of the safest investments available, because Uncle Sam is
responsible for backing the investment.