For the second day in a row, bond prices rose in tandem with stock prices. With no economic data to digest, volume was light and trading continued to be dominated by developments in equity markets, oil prices and the situation in the Mideast.
"The market had a very good tone throughout the day,"
Treasury market strategist Gemma Wright said.
The benchmark 10-year
Treasury noteclosed up 4/32 at 100 26/32, dropping its yield 1.7
basis points to 5.6 40%.
Treasury bond closed up 11/32 at 107 13/32, dropping its yield 2.4 basis points 5.73%.
Chicago Board of Trade
, the December
Treasury futures contract settled at 100 20/32, up 12/32.
The market is closely watching the political situation in the Middle East because it could easily have a major impact on prices. For example, further deterioration could be good for bonds if investors react by working up an appetite for low-risk assets. Short-maturity Treasuries normally enjoy strong demand in such situations.
On the other hand, more Middle East unrest could be harmful to bond prices if the result is an increase in spot oil prices, with inflationary implications. With such unpredictable outcomes, traders preferred to close positions and minimize exposure over the weekend.
"We closed very strongly," Wright added. But, "given the political risks, very few people would be willing to go home with a long position."
Currency and Commodities
The dollar rose against the yen and fell against the euro. It lately was worth 108.80 yen, up from 108.20. The euro was worth $0.8412, down from $0.8430. For more on currencies, see
Crude oil for November delivery at the
New York Mercantile Exchange
fell to $34.30 per barrel from $32.50.
Bridge Commodity Research Bureau Index
fell to 226.79 from 227.18.
Gold for December delivery at the
fell to $273.20 an ounce from $272.10.