Treasuries Catch a Sudden Bid

Ford's announcement of a smaller-than-expected deal and rumors of an impending intervention on behalf of the euro turn things around.
Author:
Publish date:

Treasury prices have moved into positive territory in the last hour, after spending much of the morning under water.

At least two forces are behind the move.

Ford

(F) - Get Report

announced that its much-anticipated corporate bond deal will be a bit smaller than feared at $6.5 billion. Ford had said it might issue as much as $7.5 billion, and market rumor had it that the deal might be increased in size.

Also, rumors have been flying in the currency market of an impending intervention on behalf of the beleaguered euro by either the

European Central Bank

or the German

Bundesbank

. (Neither has commented.) In recent sessions, the euro's slide has whacked the European bond market, and rising European yields have dragged U.S. yields higher.

The benchmark 30-year Treasury bond, which earlier traded down as much as 20/32, was lately 7/32 higher at 89 8/32, trimming its yield 2 basis points to 6.03%. The long bond is higher for the first time since Friday.

Market participants expect the long Treasury bond to continue to meander in a range between about 5.98% and 6.10% for the next few days. Traders are waiting for economic data to settle the question of whether the

Fed

will hike interest rates again at its next meeting on Aug. 24. The earliest they'll get any is Wednesday, when the

Producer Price Index

and

retail sales

for June come out.

The only economic indicator released today, the

Labor Department's

weekly tally of

initial jobless claims

, confirmed that the labor market remains tight. It dropped to 294,000, its lowest reading since March.