Bonds Rise Early, Awaiting Early Close

Today's action comes after yesterday's minor climb.
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The bond market was a little higher today on light volume, and the volume only figures to get lighter due to an early close. Because of the heavy rain in New York City (and by

Mayor Rudolph Guiliani's

decree), the

Bond Market Association

has recommended a 1 p.m. EDT close for fixed-income departments.

What's unusual is the

Chicago Board of Trade

will not be closing, so fixed-income departments could trade with ease until the usual futures close at 3 p.m. But sources at five of six government desks reached in New York said they would observe the close. "Typically when the PSA tells you to close, you just close," said Mike Cloherty, financial market economist at

Credit Suisse First Boston

, using the acronym for TBMA's old moniker, the

Public Securities Association

.

Of late, the 30-year Treasury bond was up 5/32 to trade at 100 15/32. The yield was up 2 basis points to 6.10%.

"The market is holding up very well, but I don't know what to attribute it to," said Marcello Frustaci, senior vice president at

Daiwa Securities

. "The market's been oversold, and the psychology may have been leaning too bearish."

The long bond fell almost a full point

Tuesday on the release of a surprisingly strong

retail sales

report, and gave back most of its gains

yesterday after a benign

Consumer Price Index

release. Today's releases haven't inspired the same furor in the market, although all three showed more of the same: a tight labor market and strength in manufacturing.

Initial jobless claims

fell to 288,000 for last week from 292,000 the week previous, the

Labor Department

said. The four-week moving average also declined, to 288,750 from 289,000. The moving average for claims has hovered between 290,000 and 310,000 for most of the year, so this figure is very low by historical standards.

The

Philadelphia Fed's business outlook index

, a survey of business sentiment in the Mid-Atlantic states, rose to 17.6 for September from 12 in August.

Industrial production

increased by 0.3% in August. The expectations as polled by

Reuters

were for this figure to come in unchanged. In addition,

capacity utilization

rose to 80.8% in August from 80.7% in July, the

Federal Reserve

said. "Given the modest increase and reasonable level of capacity utilization, the Fed does not have to worry that bottlenecks will arise that would trigger price increases," said Joel Naroff of

Naroff Economic Advisors

, in a comment.