Treasury Market Goes AWOL

With so much to look forward to in the next three days, bonds are little changed today.
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Hurry up and wait.

With so much to look forward to in the next three days, the Treasury market's stepped out for an extended coffee break today. The market's tone has improved when compared with the last three days of selling, but analysts said it's just about meaningless because trading volume isn't much more than half the usual.

John Canavan, Treasury market analyst at

Stone & McCarthy Research Associates

, said the market collectively doesn't want to make a move before

Federal Reserve

Chairman

Alan Greenspan

repeats last week's

Humphrey-Hawkins

testimony tomorrow, or before several important economic figures, including second-quarter

GDP

and

Employment Cost Index

data.

Lately the 30-year Treasury bond was up 3/32 to trade at 89 10/32. The benchmark bond's yield was flat at 6.03%. Just $10.3 billion of securities have changed hands, according to tracker

GovPX

. At 10 a.m. EDT, total volume was down 43% when compared with the average Tuesday last month.

"This is just absurd," Canavan said. "At this point there isn't any reason to do anything before Greenspan and the two-year note auction tomorrow. But Greenspan is probably going to be anticlimactic."

The Fed chairman scared the market into a 1-point selloff Thursday after his harsh, hawkish testimony before a

House

committee, which raised the stakes on another rate hike at the Fed's next meeting Aug. 24. The Fed last raised the fed funds target rate June 30 to 5% from 4.75%.

But tomorrow he's going to repeat that testimony. The only wild card would be if Greenspan sheds more light on what the Fed's got planned in response to a question from someone on the

Senate Banking Committee

. (Which is not bloody likely -- the senators will probably be too interested in getting Greenspan's blessing for whatever it is they're trying to do, tax cuts or otherwise, and Greenspan isn't going to provide pie charts on what the Fed's plans may be.)

It's also possible that Greenspan may back down from his harsh words earlier in the week.

One thing's for sure -- if demand doesn't slow and labor markets continue to tighten, the Fed will raise the fed funds target again. So bonds are going to watch economic data closely, including Thursday's release of second-quarter GDP and the Employment Cost Index, a measure of labor costs. In addition, the Treasury will sell $5 billion of two-year notes tomorrow afternoon.

Today's only monthly release, the

Conference Board's

index of

consumer confidence

, fell to 135.6 in July from 139 in June.