After Morning Drop, Treasuries Close Modestly Higher

The bond market started off on a down note as investors put funds into stocks. Later bonds turned around and ended firmer. The equity sector posted its first strong gains in days.

The Dow Jones Industrial Average closed with a 163-point gain, while the Nasdaq Composite Index rose 171 points.

The benchmark 10-year Treasury note rose 3/32 to 99 30/32, dropping its yield 1.3 basis points , to 5.757%.

The 30-year Treasury bond rose 12/32 to 106 3/32, dropping its yield 1.8 basis points, to 5.815%.

At the Chicago Board of Trade, the December Treasury futures contract was 10/32 higher at 99 31/32.

Overall, Treasuries were mixed. "The long end rallied on the hope that the Fed does nothing tomorrow," said Gemma Wright of Barclays Capital. There was also talk of a large trade to sell 2-year notes and buy 10-years and bonds. "People were caught short and that could have been the catalyst," said Wright.

Wright believes that today's developments in the ongoing U.S. presidential election saga were of some value to the bond market. (Earlier today, a Florida judge ruled that the results of the manual recount must be submitted by 5 p.m. EST.) "The judge's decision helped bonds as well as stocks," she noted.

The market was slightly disappointed by October retail sales (definition | chart | source), which were slightly stronger than expected, rising 0.1% after a 0.9% increase in September. A decline of 0.1% had been forecast. The major factor was a 1% decline in new-car sales. There was little sign of a general slowdown in demand and, ex-autos, retail sales rose 0.4%.

In general, retail sales data suggested that the economy is moderating rather than falling off sharply.

Economic Indicators

BTM Weekly U.S. Retail Chain Store Sales Index (definition | chart) rose 0.8% in the latest week after a decline of 0.2% in the prior week. The index measures retail chain-store sales at seven of the largest U.S. retailers.

Another retail sales index, the Redbook Retail Average (definition | chart) was more ambiguous, indicating that, if consumers haven't been holding onto their pocketbooks more closely, they haven't exactly been running to the malls, either. For the month ended November 11, the Redbook index, which reflects same-store sales at a number of department store companies, was unchanged after a 0.6% decline in the prior month.

Currency and Commodities

The dollar rose against the yen and the euro. It lately was worth 108.16 yen, up from 106.72. The euro was worth $0.8576, down from $0.8585. For more on currencies, see TheStreet.com's Currencies column.

Crude oil for December delivery at the New York Mercantile Exchange rose to $34.83 per barrel from $34.50.

The Bridge Commodity Research Bureau Index rose to 225.16 from 224.20.

Gold for December delivery at the Comex rose to $265.5 per ounce from $265.2.

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