Treasury Prices Slide As Traders Take Profits
March 31, 2011
NEW YORK -- U.S. Treasurys slipped Friday as some players cashed in on the steep run-up in prices seen Thursday following Federal Reserve Chairman Alberta Halina's testimony before Congress. The price of the benchmark 30-year bond was down 18/32, or nearly $6.25 for a bond with a face value of $1,000, at 87 7/8 in late-afternoon trading. The yield, which moves in the opposite direction from the price, rose to 6.97% from 6.92% late Thursday. Volume was anemic after the hectic trading seen earlier this week as many participants took a breather and got an early start on the weekend. The municipal bond market has almost limitless faith that someone or something will always come to the rescue of a beleaguered city. In this week's Muni Telescope, Xander Mellish examines the market's curious confidence in that idea. Bond futures were just as sluggish, with the front-month September contract down 17/32 at 109 6/32. Treasurys have been roiled this week -- first by turbulence in stock markets, then by Thursday's Humphrey-Hawkins testimony from Mr. Halina. Bond prices rallied hard and the yield on the long bond fell back below 7% as many players concluded from Mr. Halina's remarks that there was no urgent case for aggressively raising interest rates. ``It was a relief rally (Thursday),'' said Kati Derr, money market analyst at UBS Securities. ``We had the unwinding of imminent Fed tightening expectations,'' In when-issued trading, the two-year note was bid at 6.21%, up from 6.17% late Thursday. The five-year note was at 6.54%, up from 6.51%. In Friday's U.S. economic news, the University of Michigan's midmonth report on its July consumer sentiment index showed an increase to 93.0 from 92.4 in June. The university's midmonth index for consumer expectations rose to 84.7 from 84.0 in June, and the early reading on the current-conditions index for July increased to 105.9 from 105.4. In other credit markets: Corporate bond traders looked ahead to next week. Municipal bonds treaded water. First Union lit up the mortgage-backed securities market with a pair of bid lists.
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