Unfocused Market Moves Sideways

Volume is below average in range trading.
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So it goes with a trading range. Bonds appear to be nearing the top, so the market's a bit fuzzy this morning as to where to go next. A bit of profit-taking and hedging is impacting the intermediate part of the curve, but the short and long end are, for the most part, unchanged.

"We're nearing the upper end of the range," said Bill Kirby, co-head of government trading at

Prudential Securities

. "We may be able to extend the range but that's going to be limited ... about 8 basis points or so to the low 5.40%s."

Tracker

GovPX

reported volume down 37% when compared to the average second-quarter Wednesday. Lately the 30-year Treasury bond was up 9/32 to trade at 96 10/32, yielding 5.504%. The intermediate sector, including five-year and 10-year notes, was weaker. Lately the five-year was down 1/32 to yield 5.009%.

Dealer-related hedging against upcoming corporate deals is weighing down the intermediate sector. However, one trader who asked not to be identified said the current strength in the economy means at a 5% yield, "fives can't do much better than that. It's bumping its head on a level that it's having trouble getting through."

The Treasury is selling $7 billion of inflation-index securities, or TIPs, this afternoon. Today's only monthly economic release is February's

consumer credit

report at 3 p.m EDT. "This week is devoid of data that's relevant, so the market is chopping back and forth and there's some day trading going on," Kirby said.