Bond Market Waits for Data; Long End Weakens

It was another lackluster session for the bond market, which eroded slightly today on very low volume and not much conviction. With a full slate of data expected near the end of the week, including the April employment report, the market was quiet all day.

The most significant economic release was the new home sales report, which showed an increase in the seasonally adjusted annual rate of sales to 966,000 in March, up from 924,000 the previous month. That rate is the highest since November 1998, and contributed to the weakness in bonds -- confined to the long end.

The 10-year benchmark note was off 5/32 to 101 11/32, boosting the yield 3.4 basis points to 6.31%. The two-year note was up 3/32 to 99 12/32, dropping the yield to 6.707%. Part of today's action was a rebound from last week, when the short end was weaker, reflecting concerns that the Federal Reserve could raise the fed funds rate by 50 basis points at its May 16 meeting.

But with a funds rate at 6.50%, analysts don't feel justified in trading the 10-year bond at its current yield or the 30-year bond at less than 6%. It fell 14/32 to 103 4/32, yielding 6.024%. ...