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Treasury prices were down for the fourth successive day, as the money market trimmed its hopes for an interest-rate cut next month by a quarter percentage point. The decrease in value was steepest at the long end, with the 30-year bond finishing two-thirds of a point lower.

The commercial and jobs data released this morning came out slightly positive but remains in line with the softened economy. Investors have accounted for such information and moved portfolio positions mainly in response to signals being sent by those in control of monetary policy.

The benchmark 10-year

Treasury note fell 8/32 to 98 17/32, raising its yield 3.2 basis points, to 5.19%.

The 30-year

Treasury bond fell 23/32 to 98 6/32, raising its yields 4.1 basis points, to 5.49%.

"The market reacted in two ways today. First it priced out an intermeeting move, and then it lowered expectations of the interest rate cut in March from 50 basis points to 25," said Sadakichi Robbins, bond portfolio manager at

Julius Baer

. "This had some impact at the shorter end, where bull trades had been occurring recently."

He added, though, that the market didn't look all that bad, relatively speaking. "The 10-year is a key resistance area and technically it had been at a higher level than justified.

Greenspan has hinted he will not be as aggressive in easing rates, so technicians will probably push this security to the bottom of the trading range. The long bond also has some downside potential," Robbins said.

Robbins lists three main reasons why bond bulls are nervous -- the normalizing, or flattening of the yield curve, the shrinking of credit spreads and the greater money supply. Observing that there is enough demand for credit out there, he believes the stage is set for a soft landing.

Stronger-performing stocks also affected bonds today as investors moved some of their money back into equities. "The most popular outlook right now is for a 'V' shaped recovery. As economic numbers improve, stocks will begin lauding the change and accelerate the recovery further. And the capital markets will correspond to that," Robbins said.

But the economic crisis is not past, he warned. "The weather impact from the fourth quarter is making the present jump look stronger than it really is. Today's Philly Fed index showed that manufacturing is not going to pop back real quick."

Robbins also underscored quarterly averages rather than the latest weekly results. "That is the key thing. For example, the jobless claims are down but the four-week moving average isn't all that bullish economically."

Some more regional

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Federal Reserve officials shut the door on rate cuts in the near-term.


Richmond Fed

president Alfred Broaddus, who is considered hawkish about fine-tuning interest rates, said that a sharp drop in consumer confidence is unlikely. As for more tangible problems like inventory imbalances, he said those are confined to manufacturing and should be increasingly minimized by the application of information technology.

William Poole, who heads the St. Louis unit, called the blue-chip sector's quarter-by-quarter forecast "heartening", adding that the overall economy should have more growth in the year's second half. Dallas chief Robert McTeer said the country appeared to be faring better with consumer spending holding up well, though it was too soon to determine how much of that improvement was due to the lowering of rates in January.

The consensus among most analysts and policymakers is that the economy will grow at a rate of 2% to 2.5% for the second six months of the year.

At the

Chicago Board of Trade

, the March

Treasury futures contract fell 26/32 to 103 7/32.

Economic Indicators

In economic news,

initial jobless claims


definition |

chart |


), which track the number of people applying for first-time unemployment benefits, fell to 352,000 in the week ended Feb.10, from 363,000. Economists had predicted a drop to 359,000 in the


poll, so the lower number is a good sign. However, the reading is subject to frequent revisions. The four-week moving average rose to 345,000, its highest value since early January.

Import and export prices


definition |

chart |


) were mixed for January, with the former down and the latter up. Prices for imports for all commodities slid for the second consecutive month, by 0.4%. The average price increase for the past 12 months has also declined consistently since September; the level now stands at 2.3%. Excluding oil imports, the average monthly and yearly increases were 0.3% and 1.6% respectively. Meanwhile, total export costs were up 0.2% for January and are holding steady at 1.3% in their 12-month average. Excluding agricultural products, the price increases are 0.2% for January and 1% over the past 12 months.


Philadelphia Fed Index


definition |

chart |


), which measures regional manufacturing in Pennsylvania, New Jersey and Delaware, came out below expectations at -30.5. After the steep fall to -36.8 in January, economists had been predicting a more marked improvement than this, pegging the number at -24. The reading indicates contracting activity in factories when below zero, and though it is moving in the right direction, its slow progress indicates the severely depressed state of manufacturing. Almost every Federal Reserve official has commented upon the manufacturing sector's woes, so the latest information is not likely to surprise bond investors.

Finally, the

Consumer Comfort Index


definition |

chart ) rose by 4 points to 20, its highest level since the start of the year. The gauge reflects the state of the economy and how people are responding to general buying opportunities.

Currency and Commodities

The dollar fell against the yen and rose against the euro. It lately was worth 115.40 yen, down from 116.48. The euro was worth $0.9037, down from $0.9181. For more on currencies, see


Currencies column.

Crude oil for March delivery at the

New York Mercantile Exchange

fell to $28.75 a barrel from $29.71.


Bridge Commodity Research Bureau Index

fell to 222.40 from 223.44.

Gold for March delivery at the


fell to $255.10 an ounce from $259.40.