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Treasuries ended mixed, with intermediate-maturity issues falling while the short and long ends of the spectrum held steady, as heavy issuance of new corporate bonds, most of which have intermediate maturities, continued.

Yield-curve trading was also responsible for the market's mixed performance, market-watchers said. There was no major economic news today, though

Fed Chairman

Alan Greenspan is slated to give a speech at 8:30 p.m. EDT.

The benchmark 10-year Treasury note ended down 6/32 at 102 31/32, lifting its yield 2.8 basis points to 6.085%. The five-year note also took a relatively big hit, falling 3/32 to 102 10/32, its yield rising 2 basis points to 6.185%. But the two-year note was unchanged and the 30-year bond gained 2/32 to 105 3/32, trimming its yield a fraction of a basis point to 5.885%.

At the

Chicago Board of Trade

, the September

Treasury futures contract lost 1/32 to 97 17/32.

Investment-grade corporate bond issuance is on pace to total about $15 billion this week, more than double the average for the year to date, according to

, and most of the supply matures in five to 10 years. That puts pressure on Treasuries of comparable maturity because investors may sell Treasuries in order to raise cash to buy the new corporate issues.

That total doesn't even include today's largest new bond issues, agency bonds from

Fannie Mae



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Federal Home Loan Bank

. Fannie Mae sold $5.5 billion of five-year notes and Federal Home Loan Bank sold $3.5 billion of two-year notes. "A lot of hedging and wedging went on," said Gemma Wright, Treasury market strategist at

Barclays Capital


At the same time, there was simultaneous buying of long-maturity issues and selling of intermediate-maturity ones in the off-the-run sector, said Jerry Lucas, Treasury market strategist at

Merrill Lynch

. Off-the-run Treasuries are all but the most recently issued, or on-the-run, two-, five-, 10- and 30-year notes and bonds.

For months, the yields of long-term off-the-runs have been lower than those of intermediate-maturity off-the-runs, the same pattern that exists in the on-the-runs. Yesterday, the long-maturity off-the-runs pulled even with the intermediates, and that triggered the simultaneously buying of the long-term issues and selling of the intermediates, Lucas said. Even though both sectors fell in price, the intermediate sector fell more.

Specifically, Lucas said, Treasuries maturing from 2018 to 2021 saw their yields rise to 6.212% yesterday, even with the yields on notes maturing in 2007 and 2008. Today, the long-term yields rose to just 6.238% while the intermediate yields rose to 6.242%.

Meanwhile, Treasury market participants remain resigned to the prospect of wallowing in a trading range until new information about the economy emerges. That could come as early as Friday, with the release of the

Producer Price Index


definition |

chart |


) and

retail sales


definition |

chart |


), both for June.

"I think the market's waiting for more news," said Ray Remy, bond market strategist at

HSBC Securities

. "It needs confirmation that the U.S. economy is slowing down, and is just going to drift in a narrow range till we get more evidence."

Economic Indicators

The weekly

Mortgage Applications Survey


definition |

chart |


) detected declines in both refinancing and new mortgage activity. The Refinancing Index dropped to 284.3, the lowest reading since April 1997, from 338.5. The Purchase Index dropped to 303.0 from 318.1.

A decline in mortgage refinancings is positive for the bond market because they are a leading indicator of consumer spending.

Currency and Commodities

The dollar rose against the yen and the euro. It lately was worth 108.12 yen, up from 107.09. The euro was worth $0.9423, down from $0.9522. For more on currencies, see


Currencies column.

Crude oil for August delivery at the

New York Mercantile Exchange

rose to $30.32 a barrel from $29.70.


Bridge Commodity Research Bureau Index

fell to 219.82 from 220.11.

Gold for August delivery at the


fell to $281.40 an ounce from $283.30.