Maybe this is why? Rate cut hopes? Or maybe a FED
GOVERNER said something?
Treasurys rise as data support Fed cut
By Rachel Koning, CBS.MarketWatch.com
Last Update: 12:34 PM ET May 31, 2001
NEW YORK (CBS.MW) - Treasurys exhibited broad-based strength on Thursday after a host of economic data kept alive hopes for a deeper Federal Reserve interest-rate cut.
The yield on a Fed-sensitive 2-year note plumbed three-week lows on ideas the central bank's benchmark lending rate will go below its current seven-year-low 4 percent.
First-time filings for state unemployment benefits rose by 8,000 to 419,000 in the latest reporting week, the highest level in a month, the Labor Department reported Thursday.
The jobless claims number has risen for three weeks in a row now and the number of continuing claims, at 2.85 million, is at a 7 1/2-year high. Read more.
In yet another report, the Chicago-area purchasing management index fell in May to a seasonally adjusted 38.7. The index in April was 38.9.
A reading below 50 signals a contracting manufacturing economy, while a reading above that mark suggests growth.
But the index's employment component rose to 33.4 in May from 30.7 in April, then its lowest level since October 1980. Get the full story.Thursday's action reflects ideas that the May NAPM national manufacturing report and May employment numbers - both due Friday -- could surprise on the downside and prompt most economists to change current expectations for a quarter-point Fed cut to a half-point cut at the group's June 26-27 meeting. View Economic Preview and economic calendar and forecasts.
A 2-year Treasury note, which is among those most sensitive to the Federal Reserve's interest-rate action, rose 4/32 at 100 1/32, with its yield off 7 basis points at 4.23 percent.
A 5-year Treasury note was up 11/32 at 98 18/32, with its yield down 8 basis points at 4.96 percent.
The 10-year Treasury note was up 19/32 at 96 26/32 to yield ($TNX: news, msgs, alerts) 5.43 percent or a loss of 8 basis points.
The 30-year government bond advanced 25/32 at 94 8/32 with its yield at 5.78 percent or down 6 basis points.
Still the bond market has been largely constrained in a narrow range as a mix of data and Fed speak stir uncertainty over the economy's prospects.
The yield on a benchmark 10-year note for instance has bobbed in a tight 13-basis-point range over the past three weeks.
Dallas Fed President Robert McTeer, a non-policy voter this year, said in a speech Thursday he thought the U.S. economy would sidestep a recession. McTeer said growth in the current quarter could be just above or just below zero.
A day earlier, Chicago Fed President Michael Moskow, who does vote, said "we now expect to see improvement later in the year, but there are significant risks facing us."
In the stock arena, the broader averages were able to manage small gains after the Nasdaq Composite ($COMPQ: news, msgs, alerts) lost 6 percent over the past two sessions and the Dow Jones Industrial Average ($DJ: news, msgs, alerts) . Read more on stock market action in Market Snapshot.
Checking currencies, dollar/yen fell 1.1 percent to 119.05 while euro/dollar dropped 0.8 percent to 84.82 cents. |
