After starting the day trading higher for the first time in four days, Treasuries slid as corporate and federal agency debt issues once again garnered the bulk of attention in the money markets.
Notes and bonds also failed to get any backhanded assistance from equities. Stocks were in danger of collapsing during the early session when technology bellwethers sent out fresh alerts on poor corporate results. But, the stock market absorbed the news without much loss, thus preventing any transfer of assets towards money instruments. Bond yields remained at the level of yesterday.
The benchmark 10-year
Treasury note fell 3/32 to 104 25/32, raising its yield 1.2 basis points to 5.112%.
Treasury bond fell 21/32 to 110 7/32, raising its yield 4.3 basis points to 5.540%.
"Fundamentally the current bond market is being driven by two factors.
First, there is an increased attention towards the equity market," said Douglas Lomma, technical analyst at
, implying that the absence of major economic news made traders react to action or the lack of it among stocks. "And secondly, there is the corporate debt supply."
The money market will have snapped up as much as $34 billion of private debt this week. Today's main star was
DaimlerChrysler NA Holdings
, the financial arm of
, which sold $7 billion in bonds, pricing it 50 basis points higher than comparable issues.
"There has been some heavy corporate and agency issuance during the last few days. Many of the managers had also hedged their positions lately by buying Treasuries in advance and now they are selling them to purchase corporate or agency debt," said Kent Burns, fixed income portfolio manager at
The bond market closes early tomorrow and does not open its doors until Tuesday, so traders may have also been taking advantage of some good liquidity before taking a breather.
As for relevant economic news, Burns thinks it has "pretty much followed the pattern of weakening in all the different sectors."
The latest details disclosed today on the first-time unemployed seeking benefits were lower than expected -- not the sort of data that normally accompany a cooling economy. But this data has been prone to much adjustment lately. Burns also noted that in the last employment report, many of the manufacturing jobs lost were being absorbed into other sectors.
In any case, the market remains most keen about the December retail sales due to come out tomorrow. It should accurately reflect the buying patterns among consumers, which is critical to the nation's economic health.
There were some rumors floating earlier today about the
Federal Reserve holding yet another emergency meeting after having looked at the retail report. Notwithstanding such careless talk among some market participants, the general consensus on the street remains that gloomy retail information is already part of the Fed's internal discussions.
The president of the
Philadelphia Federal Reserve Bank
, Anthony Santomera, said in a speech today that weaker production data and declining retail and auto sales had prompted the central bank to cut interest rates last week.
According to Burns, the fed funds futures index continues to indicate a high probability of a 50-basis-point cut in the fed funds rate at the end of the month. "A lot of people are going to be watching the Fed and wondering how the stock market is going to be affected. But, as far as bonds are concerned, I don't see a lot of inflationary pressure in the next six months and that is good for bonds," he concluded, emphasizing that the inflation index remains of prime importance to Treasuries.
Chicago Board of Trade
, the March
Treasury futures contract was down 25/32 to 103 23/32.
In economic news,
initial jobless claims
), which tally those filing for state unemployment benefits for the first time, fell lower than expected to 345,000 in the week ending Jan. 6, from 381,000 the previous week. Economists polled by
had predicted a number of 374,000. The tightening of the labor market contradicts the recent news of companies shutting down or having to lay off a large part of their workforce. However, the claims number may be revised since some states submit preliminary data. The four-week average rose to 363,000 from 356,750. It is its highest value since mid-July, 1998.
Import and export prices
) fell in December. The Import Price Index fell 0.5%, largely due to a 9.3% drop in oil prices. Excluding oil, the index gained 0.9%. The growth rate of import prices slowed for the third consecutive month, falling to 3.5% from 4.7% in November.
Consumer Comfort Index
chart ), which assesses consumers' confidence in the overall economy, fell to 23% for the week ending Jan.7 -- its lowest level in the last 12 months, six points below the average for that period and 15 points below the high.
Currency and Commodities
The dollar rose against the yen and fell against the euro. It lately was worth 117.60 yen, up from 116.49. The euro was worth $0.9528, up from $0.9364. For more on currencies, see
Crude oil for February delivery at the
New York Mercantile Exchange
slipped to $29.41 a barrel from $29.48.
Bridge Commodity Research Bureau Index
fell to 229.11 from 229.81.
Gold for March delivery at the
fell to $264.80 an ounce from $265.60.