Up, up and away.
The 30-year Treasury bond lately was up 1 11/32 in sparse morning activity, with the price rising to 111 19/32. The yield fell to 4.77% and earlier touched 4.76%, its lowest since the Treasury began regular sales of the security in 1977.
Again, foreign stock markets spurred the bond market rally. The
were down 2% and 4%, respectively, overnight. When the
opened down, Treasuries held their gains and continued to rise. The
Group of Seven
finance ministers did not take any firm action this weekend and did not deliver any supporting statement for the yen.
"I think we're still in a wait and see mode," said Gregory Carr, market analyst at
. "The market is still waiting for some agreed-upon plan and group commitment
from the G7."
Some progress, or at least lip service, is on the agenda this week.
officials today on the financial version of
Mies van der Rohe's
speaks before the same officials prior to the
International Monetary Fund
meetings beginning tomorrow.
There's now a bigger basis-point gap between the long bond yield and the 5.25% fed funds short-term lending rate than there was before Tuesday's rate cut. Prior to the
easing, the widest closing difference between the 30-year Treasury and funds was 38 basis points. The difference is currently 48 basis points.
"It tells you that, one, maybe the Fed is a little behind the curve, and two, that the market still feels the Fed has to do some work," said Carr. "If you still feel comfortable with the long bond the market believes more
cuts can come without hurting us."
Federal Reserve Governor
, speaking at the
National Association of Business Economists
conference, said the Fed easing was pre-emptive because it marks a revision of the Fed's forecast for economic growth in this country.
Meyer said this morning that the U.S. "continues to operate at high utilization rates and with low inflation. But the cumulative force of recent developments appears likely to yield a slowing of growth next year."
Only one economic report was released this morning, the still-new
National Association of Purchasing Management nonmanufacturing index
, which measures sentiment among purchasing managers in the nonmanufacturing industries. The index read 59 this morning, a recovery from August's 52 reading.