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%.

The 30-year

Treasury bond fell 19/32 to 107 5/32, lifting its yield 3 basis points to 5.744%.

At the

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

(

definition |

chart |

source

) due tomorrow as the

Fed is known to place considerable weight on labor market data. Third-quarter

GDP

(

definition |

chart |

TST Recommends

source

) is due on Friday. Both sets of data are expected to be fairly strong.

Economic Indicators

The

Mortgage Applications Survey

(

definition |

chart |

source

) 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.

September

existing home sales

(

definition |

chart |

source

) 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

TSC's

Currencies column.

Crude oil for delivery at the

New York Mercantile Exchange

fell to $32.95 a barrel from $33.35.

The

Bridge Commodity Research Bureau Index

fell to 222.63 from 225.41.

Gold for December delivery at the

Comex

fell to $267.9 an ounce from $272.1.