The 30-year Treasury bond got a lift from the latest drop in the price of oil, but the rest of the bond market ended little changed, recouping early losses.

Shorter-maturity Treasuries struggled early in the session as traders speculated that foreign central banks were selling in order to finance their purchases of euros on Friday as part of the

joint intervention to boost the value of that currency.

A much stronger-than-expected

existing home sales


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chart |


) report went largely unnoticed. "It was awfully strong but it was awfully ignored,"

Stone & McCarthy Research Associates

analyst John Canavan said. "People are more focused on other issues -- the euro, equities and oil."

The benchmark 10-year

Treasury note traded down as much as 8/32 but finished up 2/32 at 99 1/32, trimming its yield 0.9

basis points to 5.839%. Shorter-maturity issues were likewise little changed at the end of the day.

But the 30-year bond gained 7/32 to 104 28/32, trimming its yield 2.5 basis points to 5.899%. At the

Chicago Board of Trade

, the December

Treasury futures contract gained 6/32 to 98 11/32.

The 30-year bond has been guided primarily by oil prices lately, falling in price when oil rises and rising when oil falls, and that continued today. The bond rose as oil fell to a one-month low in reaction to the Clinton administration's

decision to tap the country's emergency stockpiles.

People buy and sell long-term bonds based on the price of oil to the extent that they think energy prices will have a lasting impact on the inflation rate. Expectations of rising inflation hurt long-term bond prices, while expectations of lower inflation help them.

Cheaper oil helps long-term Treasuries through another channel as well,

Deutsche Bank Securities

senior U.S. economist Joe LaVorgna pointed out. It allows growth to continue at a good clip, which should allow the U.S. government to continue to run budget surpluses, which will mean continued

buybacks of long-term Treasuries.

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"Growth is not necessarily bad for bonds," as long as investment in technology continues to improve the economy's productive capacity, LaVorgna said. In that regard, "everything's been turned on its head."

Meanwhile, shorter-maturity issues battled the assumption that the countries involved in Friday's currency market intervention will sell Treasuries to finance their purchases of euros. (Short- and intermediate-term Treasuries are a main asset of foreign central banks). Also, additional rounds of intervention -- which could trigger additional selling of Treasuries -- are possible if the euro resumes its slide.

Economic Indicators

Existing home sales


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chart |


) surged 9.3% to an annual pace of 5.27 million in August from 4.82 million in July, possibly indicating faster-than-expected economic growth in the months ahead.

Powering the gain, mortgage rates fell to their lowest levels of the year in August, as measured by

Freddie Mac

, which

said the average 30-year rate was 8.03%, the lowest since December.

Economists polled by


predicted a much smaller increase, to 4.95 million.

Currency and Commodities

The dollar fell against the yen and rose against the euro. It lately was worth 107.79 yen, down from 107.95. The euro was worth $0.8750, down from $0.8758. For more on currencies, see


Currencies column.

Crude oil for November delivery at the

New York Mercantile Exchange

fell to $31.64 a barrel from $32.68.


Bridge Commodity Research Bureau Index

fell to 226.08 from 226.30.

Gold for December delivery at the


rose to $277.3 an ounce from $275.10.