After a positive start, the bond market fell away to close moderately lower on the day. The market didn't get much of a boost from the Treasury's announcement that it would buy back $1.5 billion in debt, part of its plan to buy back up to $30 billion in government debt this year.
The benchmark 10-year
Treasury note fell 15/32 to 100 14/32, lifting its yield 5
basis points to 5.690%.
Treasury bond fell 19/32 to 107 5/32, lifting its yield 3 basis points to 5.744%.
Chicago Board of Trade
, the December
Treasury futures contract fell 15/32 to 100 11/32.
The market's view is that the Treasury sector's gains over the past few days are somewhat excessive and that a correction was inevitable. With no new threats looming from the Middle East and a leveling off in oil prices, it was likely that the flight-to-safety argument for moving into bonds would run out of steam.
However the bond market might have expected to benefit from another down day in the equities markets. "It's the first time in over two weeks that we've dissociated ourselves from equities," said Anthony Karydakis of
Banc One Capital Markets.
Karydakis believes that both markets have been based on the view that the
Fed has finished pushing rates higher and, "that's a high-risk proposition and that could cause a bit of a setback."
In addition, the market is nervous ahead of the
Employment Cost Index
) due tomorrow as the
Fed is known to place considerable weight on labor market data. Third-quarter
) is due on Friday. Both sets of data are expected to be fairly strong.
Mortgage Applications Survey
) for the week ended October 20, rose to 587.2 from 498.6 in the previous week. Refinancings continue to rise while the purchase index slipped to 298.7 from 311.1.
existing home sales
) fell to 5.14 million from 5.28 million in August. Sales have been largely flat since July.
Currency and Commodities
The dollar rose against the yen and the euro. It lately was worth 108.14 yen, up from 107.85. The euro was worth $0.8282, down from $0.8374. For more on currencies, see
Crude oil for delivery at the
New York Mercantile Exchange
fell to $32.95 a barrel from $33.35.
Bridge Commodity Research Bureau Index
fell to 222.63 from 225.41.
Gold for December delivery at the
fell to $267.9 an ounce from $272.1.