Treasuries Rally as Stocks Fall Amid Florida Stalemate
The Treasury market had a broadly positive day today. The long end did particularly well. The continued stalemate in the U.S. presidential election as votes are recount in Florida is helpful to the bond market, as it suggests an increased likelihood that part of the budget surplus will be used to pay down public debt. This provides a constructive environment for bond prices.
In addition, the bond market benefited from another down day on the equities market. Stocks closed modestly down, following a late-day recovery from a much sharper morning decline.
The benchmark 10-year
Treasury note rose 5/32 to 99 26/32, dropping its yield 19
basis points to 5.774%.
The 30-year
Treasury bond rose 17/32 to 105 27/32, dropping its yield 35 basis points, to 5.833%.
At the
Chicago Board of Trade
, the December
Treasury futures contract was 15/32 higher at 99 21/32.
"Very little is happening in Treasuries. It's all happening in equities," said Avram Altaras of
Bear Stearns
. Altaras was not impressed by the market's gains today. "A lot of people were disappointed, and it's hard to make the case that Treasuries will rally from here," he added.
Economic data have been fairly weak in recent weeks, which adds ballast to the belief that the economy is slowing. Indeed, there is some market speculation that the
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Fed will adopt a more accommodative stance towards monetary policy at its meeting this week. "The Fed might go to a neutral directive, but we don't assign a high probability to that," said Altaras.
The
Dow Jones Industrial Average closed down 85 points today, while the tech- heavy
Nasdaq Composite Index fell 62 points.
Currency and Commodities
The dollar fell against the yen and rose against the euro. It lately was worth 107.62 yen, down from 107.97. The euro was worth $0.8584, down from $0.8598. For more on currencies, see
TSC's
Currencies column.
Crude oil for December delivery at the
New York Mercantile Exchange
rose to $34.50 per barrel from $34.47.
The
Bridge Commodity Research Bureau Index
fell to 224.20 from 225.44.
Gold for December delivery at the
Comex
fell to $265.2 per ounce from $265.3.
