The Treasury market is down again this morning, with yields on all notes higher than the fed funds rate for the first time since September, amid continuing weakness in the dollar and bearish comments by
The benchmark 30-year Treasury bond lately was down 18/32 at 99 5/32, lifting its yield 4 basis points to 5.31%. That's the highest long-bond yield since Nov. 7. And the bond was significantly off its worst levels of the day. Shortly after 9 a.m. EST, it was down as much as 1 13/32, lifting the yield to 5.36%. The 5.375% yield level is attractive to buyers,
Miller Tabak Hirsch
chief bond market strategist Tony Crescenzi said.
With no major economic data out today, traders are focused mainly on the dollar, which continues to make new multiyear lows against the Japanese yen. Today it has traded as low as 108.53, its lowest since Aug. 30, 1996. A weakening dollar hurts Treasuries through two channels. It makes imports more expensive, which allows domestic producers to raise their prices as well, fostering inflation. And it reflects growing confidence in the Japanese economy, which should produce higher Japanese interest rates. If Japanese interest rates rise, to stay competitive U.S. interest rates will have to go up as well.
"As long as the dollar trades poorly, the market is going to trade poorly," said Scott Graham, co-head of government bond trading at
. "If competition for capital is greater, U.S. rates are going to have to rise, especially if there's no slowdown here."
Friday, a much stronger than expected monthly
employment report cast doubt on the idea that U.S. growth will slow markedly this year.
Comments by Greenspan earlier today in Hong Kong, as told to reporters by the head of the
Bank for International Settlements
, may also be weighing on bond prices.
said Greenspan foresaw "that although the prospects are for some easing in the pace of growth in the United States, the growth rate had been until now encouraging and the slowing that was foreseen for next year would be relatively moderate in nature and would still leave a satisfactory position,"