Downbeat Treasuries Surrender Early Gains

Weakness in oil and stock prices doesn't matter much to a market that's focused on the next jobs report.
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The Treasury market is down slightly this morning, having surrendered gains it made on a weaker-than-expected October

durable goods orders

report, despite a pullback in oil and stock prices.

That's evidence to some observers that until and unless the November

employment report

, due out next Friday, provides some evidence that economic growth is slowing, the bond market will have a tough time rallying.

The benchmark 30-year Treasury bond was lately down 1/32 at 99 3/32, its yield unchanged at 6.19%. Shorter maturity notes were unchanged.

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The long bond popped up 6/32 immediately after the 8:30 a.m. EST release of the durable goods report. Orders for durables, a leading economic indicator, slid 1.3% in October, vs. an average forecast by economists polled by

Reuters

that they would rise 0.4%.

The drop wasn't due to the volatile transportation sector. Orders for transportation equipment surged 3.4%. Excluding transportation, durables orders fell 2.6%.

But nor did it reflect broad weakening. The total was dragged down mainly by electronic equipment orders, which plummeted 15.3%, their largest decline since July 1997.

"We tried to rally and couldn't,"

Donaldson Lufkin & Jenrette

Treasury market strategist David Ging said. "I think it's an indication of the lack of strength in the market. Even the equity decline is not doing much to help. We're having a harder time going up and an easier time going down, and good news does little to support it."

Outside of stocks, where falling prices can support the bond market by dampening consumer propensity to overstimulate the economy by spending too much money, the energy market is providing good news by sending oil prices down from the eight-year highs they reached yesterday. Crude oil for January delivery was lately down 1.2% at $26.75 a barrel on the

New York Mercantile Exchange.