Treasuries ended unchanged thanks to the late-day selloff in stocks. Earlier in the session, they were under pressure as a key commodity price index bounded to a two-year high, highlighting inflationary pressures in the economy.
At various points during the session, bond traders turned their attention to the
latest buyback, and to a rumor, swiftly declared false, that
Alan Greenspan had been in a car accident. But neither the buyback nor the rumor affected prices.
The benchmark 10-year Treasury note was unchanged at 102 26/32 in late trading, its yield 6.107%. The 30-year bond was unchanged at 103 30/32, its yield 5.967%.
Chicago Board of Trade
, the September
Treasury futures contract fell 3/32 to 96 16/32.
Early in the session, Treasuries traded up slightly, anticipating the 11 a.m. EDT buyback. At that hour, dealers wishing to sell bonds back to the Treasury Department had to tender their offers. The department ultimately accepted offers on $2 billion par amount of bonds maturing between February 2015 and August 2019, as it had announced it would.
Reactions to the buybacks, which began in March, have varied. Following some, prices have fallen because dealers -- whose offers were not accepted -- sold their bonds to other buyers. After others, prices have risen because dealers sold to the Treasury Department more than they had expected to, so they bought bonds to replace the ones they'd sold. Today's buyback appeared to go more or less as expected, said Mark Mahoney, Treasury market strategist at
. "People were much better set up for this one," he said.
But later in the session, Treasuries surrendered their gains as the
Bridge Commodity Research Bureau Index
raced higher, driven primarily by energy prices but also by cocoa, which surged more than 6% on rumors of a coup in
, a top producer.
"The CRB and oil are not sending real good signals to the Fed," said Mary Ann Hurley, a trader at
in Seattle. The
Federal Open Market Committee is meeting next week to set monetary policy, and while hardly anyone expects a change in the
fed funds rate, there is uncertainty about how much higher the rate will ultimately have to rise in order to contain inflation.
The fact that Treasuries performed as well as they did today is a testament to the popularity of the view that more than one more rate hike won't be necessary, Hurley said. "I guess the Street really does believe the slowdown is legit," she said.
The 30-year bond underperformed its shorter-maturity peers, probably due to two competing 30-year bond issues, UBS Warburg's Mahoney said. The country of
sold $1.4 billion of bonds, and the
Tennessee Valley Authority
started taking offers on $1 billion to be sold tomorrow.
In the only economic news of the day,
initial jobless claims
rose to 312,000 from a revised 297,000 the previous week, indicating a slight slackening of labor-market conditions.
Currency and Commodities
The dollar fell against the yen and rose against the euro. It lately was worth 104.43 yen, down from 105.58. The euro was worth $0.9355, down from $0.9442. For more on currencies, please take a look at
Crude oil for August delivery at the
New York Mercantile Exchange
rose to $32.19 a barrel from $31.37.
The CRB Index rose to 227.04, the highest since May 1998, from 225.04.
Gold for August delivery at the
fell to $287.20 an ounce from $288.10.
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