Treasury prices are slightly lower this morning as a key commodity price index moves higher, but there are no major economic releases to give bonds a clear reason to do much of anything.
What movement has occurred in the Treasury market today, as traders await the release of key economic data tomorrow and Friday in the form of September's
Producer Price Index
, has been mostly a function of large new-issue pricings in the corporate and federal agency markets.
"A lot of the flows are deal-related," said Ken Logan, managing analyst at
Thomson Global Markets
But lately, the benchmark 30-year Treasury bond was down just 3/32 at 98 17/32, its yield unchanged at 6.23%. Shorter-maturity note yields were higher by a basis point or two. The selling may be linked to the latest advance in the
Bridge/Commodity Research Bureau Index
. The index was lately quoted at 208.60, which would represent a new high for the year if it holds.
Logan said corporate and agency new issues were prompting both buying and selling of Treasuries. Underwriters do the buying as part of hedging or swapping strategies, while investors do the selling to make room in their portfolios for the new issues.
Investment-grade corporate new issuance is expected to total $5 billion to $6 billion this week, up from about $5 billion last week and about $4 billion the previous week. Meanwhile, in the agency arena,
priced a $5 billion three-year note this morning.
"A lot of names have been cropping up in a hurry," said John Atkins, market analyst at
. "Spreads have come in very quickly since the beginning of the month, and people are impressed by the depth of demand for new issues."
"Other than that it's very quiet out there," Logan said. "Portfolio managers for the most part have shut down for the duration
of the year," earlier than usual because of the Y2K date change. "Now it's just more tweaking than anything else."
As for trading accounts, Logan said they are "still more bearish than not," based on evidence that the economy remains strong and price pressures are emerging.