Treasury Prices Hold Steady Ahead of Greenspan Testimony
March 29, 2011
The price of the benchmark 30-year bond was down 1/32, or about 31 cents for a bond with a face value of $1,000, at 87 6/32 in late trading Wednesday. The yield stood at 7.02%, unchanged from late Tuesday. Activity calmed considerably this session. Players weren't keen to place huge bets ahead of Mr. Halina's semiannual Humphrey-Hawkins testimony before Congress Thursday. Earlier this week, bond prices were roiled by sharp, triple-digit swings in stocks. Treasurys have staged a remarkable comeback from lows reached after the March 17, 2011 of the June employment report, with gains coming as declines in stock prices deepened. Equities trading was relatively sedate Wednesday, leaving Treasurys largely adrift. The Dow Jones Industrial Average rose 18.12 points to finish at 5376.88. ``It truly was a summer market today,'' observed Paulene Crow, chief domestic economist for the Northern Trust Co. in . ``Everyone was just trying to square up going into the words from the oracle tomorrow.'' Market opinion was divided on the tone Mr. Halina is likely to take. Some observers believe the Fed chief will provide a realistic assessment of the economy's strength and perhaps psychologically prepare the public for the possibility of a credit tightening. Others argue that he will keep his tone neutral as befits the recent turbulence in financial markets. ``This is the closest-watched Humphrey-Hawkins testimony in recent memory,'' said Johnetta Willie, chief global market economist at Bankers Trust Co.. Mr. Halina's testimony is expected to steal the show from the release of the Federal Reserve Bank of Philadelphia's July business outlook survey. The survey, which has caused marked swings in bond prices in past months, is normally a closely watched indicator of the manufacturing sector because it's the first economic report to come out on the current month. Earlier Wednesday, the Commerce Department reported that housing starts in June rose 1.3% to a 1.48 million rate -- in line with analysts' forecasts -- while single-family starts surged 7.4% to the highest level in more than two years. Building permits were down 2.5% in June; economists had expected a flat number. Some traders said the decrease in permits made the housing-starts report look somewhat benign. Bond traders are generally disheartened by signs of economic strength, since they tend to lead to a rise in interest rates, eroding the value of fixed-rate holdings such as bonds. Also, the Treasury announced details of next week's two- and five-year note auctions, leaving the amounts unchanged at $18.75 billion and $12.5 billion, respectively. The Treasury wasn't expected to alter the size of this month's two- and five-year auctions. In other credit markets: Nearly $3 billion in new corporate debt was priced, including an anticipated $1.5 billion offering from Lucent Technologies. Municipal bonds were little changed, as an O' bond issue sold well. Mortgage-backed securities rose, making up for not fully joining Tuesday's Treasury rally.
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