Treasury prices are very little changed this morning amid paltry market activity. There's nothing on the economic calendar and traders are counting down to the next big report -- the third-quarter
Employment Cost Index
"If the ECI is stronger than expected, there'll be another whoosh down," said Avram Altaras, Treasury market strategist at
. Economists polled by
expect a 0.9% increase in the ECI, following a 1.1% increase in the second quarter.
Treasuries are currently sitting near their lows for the year on fear that inflation will rise, prompting additional interest-rate hikes by the
. The benchmark 30-year bond was lately up 2/32 at 97 1/32, its yield unchanged at 6.35%. Shorter-maturity note yields were likewise little changed.
The bond market is unlikely to see much improvement before the ECI release, Altaras said. Also working against it is the approach of the quarterly refunding, when the Treasury auctions new long-dated notes and bonds. The fourth-quarter refunding, slated for the second week of November, will include five- and 10-year notes only.
In other market news, the
New York Fed
is disputing a wire service's interpretation of an announcement it made yesterday afternoon regarding discount window borrowing.
is reporting that a
New York Fed
circular to banks in its district, announcing an expansion of the securities it will accept as collateral for discount window borrowing "will help ensure trading remains unhindered amid concern about problems associated with possible Year 2000 computer failures."
Doug Tillett, a spokesman for the New York Fed, said the news was "misplayed. Somebody suggested it was related to other changes made in open market operations to ensure liquidity at year end. It's not that."
Last month, the New York Fed expanded its list of collateral for open market operations in order to ensure year-end liquidity.
Yesterday's announcement is different, Tillett said, in part because discount window borrowing is very rare, and in part because the change that was announced is "permanent till otherwise changed." Last month's open- market operation changes were approved only through April 2000. "If anything, this could almost be characterized as long overdue," he said.