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Volume Light as Treasuries, Commodities Reopen Trading

The market cautiously moves forward in the first activity since Tuesday's terror.
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New York's Financial District was still under rubble Thursday morning butthe nation's capital markets crept back to life.

Treasury bonds became the first securities to change hands on a since terrorists destroyed the World Trade Center and manyinvestment firms on Tuesday. Commodities also resumed trading on a limitedbasis at the Chicago Board of Trade and Chicago Mercantile Exchange.

Two-year notes rallied, their yield falling to about 3%, while thebenchmark 10-year bond swung in a full-point range amid concerns aboutinsurance losses and the impact of the explosion on the U.S. budget andeconomy. Investors sought a safe haven in the short end, particularly withnodefinitive word on when stock trading would resume.

Volume in the bond markets was extremely low, although therewas solid action in interest rate futures such as eurodollar and Fed fundscontracts. With the Treasury Department promising easy access to liquidityand the impact of the dister on the economy still unclear, trading inOctoberFed funds futures implied expectations of a quarter- to half-point cut ininterest rates. The Federal Open Market Committee next meets Oct. 2.

Overseas, stocks were modestly higher in volatile and heavy trading inEurope, while Asian markets that were open for their second day rose. TheEuropean Central Bank met Thursday and decided, as expected, to leave ratesunchanged. The ECB benchmark is currently 4.25%. The dollar was unchangedagainst the pound and higher against the yen.

Equity market officials were meeting in New York again to formulate adefinitive timeline for the resumption of stock trading. On Wednesday,Richard Grasso, the chairman of the

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, said theexchanges would open Friday at the earliest, but probably not untilMonday.

"We are still in the recovery phase," Grasso said. "There are stillpeople trapped in that wreckage and we have to be very careful to make surethat nothing we do in any way interrupts the efforts ot the brave men andwomen who are at that site."

Efforts to remove debris from Lower Manhattan continued Thursdaymorningand access to the area was limited to emergency vehicles. The NYSE, whichislocated about two blocks east and two blocks south of where the TradeCenterstood, was cordoned off, and officials remained concern about a myriad ofissues, including safety, access and the communications infrastructure.

Some market players worried the damage would lead to unfair advantagesboth in access to prices and physical infrastructure. Art Hogan, astrategistwith Jeffries, said any major inequalities would result in a halt intrading.

"Having all of us using the New York Stock Exchange as a pricingmechanism is one thing that handicaps all of us. We're all sort of dealingwith the same thing as far as the pricing mechanism and the centralmarketplace," Hogan said. "If the market's open, those prices are going tobegood."

The U.S. government released itsfirst major economic indicator since the terrorist attack, saying newunemployment claims rose 21,000 to 431,000 in the week of Sept. 8.