Treasuries Retreat From Highs

Don't blame it on Greenspan. Humphrey-Hawkins II failed to make an impression on the bond market.
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Treasuries gave back a large portion of yesterday's big gains, which dropped the yields of the 10-year note and 30-year bond to their lowest levels of the year.

Yesterday, the benchmark 10-year Treasury note gained 30/32, dropping its yield to 6.363%, the lowest since Dec. 20. The 30-year bond gained 30/32, dropping its yield to 6.086%, the lowest since Nov. 16.

The move started before

Fed

Chairman

Alan Greenspan's

appearance before the

Senate Banking Committee

, and reflected profit-taking more than anything else, market analysts said.

Greenspan's appearance generated some intriguing headlines, but from a market perspective it turned out to be a nonevent. The Fed chairman

repeated word for word the

Humphrey-Hawkins

testimony he delivered to the

House Banking Committee

last Wednesday. Then he took Senators' questions. But while his responses were interesting, they weren't market-moving.

The Treasury's monthly two-year note auction also kept traders on their toes today. Strong bidding at an auction can set a positive tone in the market, while weak demand can set a negative tone. The Treasury sold $12 billion of new two-year notes at a yield of 6.590%. The measure of demand -- the bid-to-cover ratio, which compares the volume of securities bid for to the volume offered for sale -- was better-than-average, at 2.66. The previous 12 auctions produced an average bid-to-cover ratio of 2.15. But that was mostly due to the fact that the amount offered was smaller. The previous 12 auctions sold either $14 billion or $15 billion of notes. So the impact of the results was muted.

"A small pullback from the highs would be expected on a two-year auction day, and there was a bit of caution given that Greenspan was in a Q&A," said Ray Remy, executive managing director at

HSBC Securities

.

The benchmark 10-year Treasury note ended down 14/32 at 100 18/32, lifting its yield 5.9 basis points to 6.422%. The 30-year Treasury bond, which has lost its benchmark status in recent weeks because the government's plans to reduce the supply of the issue has boosted its value, fell 23/32 at 101 17/32, lifting its yield 5.1 basis points to 6.137%.

At the

Chicago Board of Trade

, the March

Treasury futures contract lost 20/32 to 95 20/32.

Economic Indicators

Only weekly economic indicators today, some of them delayed from Tuesday because of the long weekend. This week's highlights are the

durable goods orders

report for January tomorrow and the initial revision to fourth-quarter

GDP

on Friday.

The

Mortgage Applications Survey

detected a slight decline in refinancing activity and an increase in new mortgage activity. The Refinancing Index fell to 372.9 from 373.1. The Purchase Index rose to 291.1 from 270.8.

The

BTM/Schroder Weekly Chain Store Sales Index

rose 0.2%, following a 1.2% gain the previous week.

The

Redbook Retail Average

rose 0.8% in the first three weeks of February, compared with January.

Currency and Commodities

The dollar gained against the yen and the euro. It lately was worth 111.15, up from 110.86 yesterday. The euro was worth $1.0025, down from $1.0038 yesterday.

Crude oil for April delivery at the

New York Mercantile Exchange

rose to $29.33 from $28.92 yesterday.

The

Bridge Commodity Research Bureau Index

fell to 210.13, from 212.02 yesterday.

Gold for April delivery at the

Comex

fell to $302.5 an ounce from $307.7 yesterday.