Treasuries Little Changed After Economic Reports Clash

Treasuries are little changed this morning, with volume in the active issues quite light, after a rash of mixed economic reports.

The 30-year bond, up as much as 5/32 and down as much as 11/32 earlier, was lately up 1/32 at 92 7/32, its yield unchanged at 5.80%.

Fed

Chairman

Alan Greenspan

is testifying before the

House Banking Committee

about the international financial system, but his

prepared remarks don't touch on the economy or monetary policy.

To the extent that economic reports have influenced trading this morning, they've more or less canceled each other out.

The March

international trade

report measured a wider-than-expected deficit which, fortunately for the bond market, will have a depressing effect on next week's second-pass estimate of first-quarter

GDP

. As import growth (up 1.3%) outpaced export growth (up 0.9%), the deficit rose 2.9% to an all-time high of $19.7 billion.

Also fortunately for the bond market, the May

Philadelphia Fed Index

, which gives the earliest read on the state of the manufacturing sector in the current month, slipped a tad after exploding higher in April. The index fell to 21.1 from 26.4. The positive market reaction was also due to a pre-release rumor that the report was a barnburner,

MCM Moneywatch

chief economist Russell Sheldon said.

"The positive impact was probably because Philly Fed was not as bad as expected, and because Greenspan chose not to shoot anybody on sight," he said. The last time the Fed chairman opened his mouth in public, on May 6, his

words on the subject of inflation triggered a nearly full-point drop in the price of the long bond.

But in the negative column for the Treasury market, the weekly tally of

initial jobless claims

dipped below 300,000 again, shedding 12,000 to 299,000.

"I think they hit it a little on the drop in claims and traded it up a little bit on the Philly Fed," said Gib Clark, manager of government bond trading at

Zions First National Bank

in Jersey City, N.J. "But all these things are nuances."

Volume has been pathetic in the active issues. Through 10 a.m. EDT just $19.8 billion had changed hands, 24.8% below average for a second-quarter Thursday according to tracker

GovPX

. Clark said much of the activity in the market this morning has been in older issues, also known as off-the-runs. Some of it may have been related to the 9:30 a.m. EDT pricing of a $1.5 billion 30-year bond by corporate issuer

Fannie Mae

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