Bonds Sluggish, Like A Wet Sponge

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On a day like this, it is said that bonds "trade in a range."

Which is to say that not much is happening. The benchmark 30-year bond was down 2/32 to 105 18/32, with the yield at 5.73%. Even dollar/yen was quiet -- the dollar was down 0.53 to 139.55 by 11 a.m. EDT.

Expectations as reported by Reuters

The bond bounced in the early morning on strength in the yen but settled quickly. Clearly, important matters are for next week:

Fed Chairman Alan Greenspan

will deliver his semiannual

Humphrey-Hawkins

testimony before

Congress

next Tuesday.

"There's no consensus about what he's going to say," said William Lloyd, head of market strategy at

Barclays Capital

. "You could say there's less of an argument for a tightening than there was a month ago."

Of paramount importance to the strength of our economy is Japan's. The two front-runners for the post of prime minister,

Keizo Obuchi

and

Seiroku Kajiyama

, presented outlines for financial reform and income tax cuts in the world's second-largest economy. Obuchi was surprisingly direct and specific in his words, while Kajiyama promised more widespread reform, according to published reports.

Whether Asia is having a pronounced effect on the overall economy is debatable, but it is clearly the source of the widening of the trade deficit to a record $15.75 billion in May. The market had expected a $14.66 billion figure.

"Our welfare is tied to the welfare of Asia," said

President Clinton

on television this morning, taking the opportunity to stump for this country's full contribution to the

International Monetary Fund

, the subject of an ongoing political tussle between Clinton and Congress.