#1 "Official" reason market slowed down -
biz.yahoo.com
US Treasuries droop ahead of US data, supply
flood
(UPDATE: Updates market prices, adds quotes, changes byline)
By Daniel Sternoff
NEW YORK, Aug 28 (Reuters) - U.S. Treasury prices sagged on Monday,
yanking long-term yields off last week's year-lows in relative illiquid trading
as dealers girded for key economic reports this week and a flood of corporate
supply next month.
Analysts said the market may have run ahead of itself last week, when optimism that the Federal Reserve
is done raising interest rates for now as the red-hot economy moderates sent many Treasury yields to lows
not seen since the summer of 1999.
``We are fully priced for no Fed -- forever. Perhaps that's a little too aggressive,'' said John Roberts, head
of governments trading at Barclays Capital.
``Maybe the news isn't as rosy as it's been painted to be or as we have led ourselves to believe. I think
guys are just reducing some risk here,'' he said.
A U.S. Commerce Department report issued on Monday showed consumer spending in July increased by
0.6 percent, outpacing personal incomes, which rose by 0.3 percent.
The report had little impact on prices, but traders opted for a defensive stance ahead of heavy-hitting data
due Friday, the U.S. payrolls and National Association of Purchasing Management (NAPM) reports for
August.
``Maybe the longer end feels a little vulnerable going into Friday and just backing up a little bit,'' said
Richard Bodkin, managing director and head of government bond trading at Banc One Capital Markets in
Chicago.
Analysts said market players were also clearing room on their books to absorb a deluge of new corporate
issues, mainly from heavyweight telecommunications firms, slated to hit the market next month.
``There is some talk of a corporate bond rate-lock, not so much for this week, but setting up for issues
that will be launched in September,'' said Kevin Logan, economist at Dresdner Kleinwort Benson.
At the 3 p.m. (1900 GMT) New York settlement, 30-year bonds were 25/32 lower at 107-16/32 with a
yield of 5.72 percent. Ten-year notes were 12/32 lower at 99-24/32, yielding 5.78 percent.
Dealers said thin late summer volumes ahead of the long Sept. 2-4 U.S. Labour Day weekend were
exaggerating market movements.
Traders said longer-dated Treasuries were also put under pressure by gains in the U.S. stock markets,
along with another spike upward in crude oil prices for September delivery toward $33 a barrel.
``The Fed's on hold, but if stocks continue to do well, you have to wonder whether the 'wealth effect' will
be alive and well and spending will be stronger than it ought to be, in which case you need to be cautious,''
Logan said.
Five-year notes were off 3/32 at 102-27/32, yielding 6.04 percent, while two-year notes were flat at
99-26/32, yielding 6.22 percent.
The Treasury Department said on Monday it sold 9.5 billion in 3-month bills at a high rate of 6.14 percent
and 8.5 billion of 6-month bills at a high rate of 6.1 percent.
#2 Unofficial (real) reason market pulled back (IMO <g>)
marketswing.com
It's ALL TA!
S&P hit top of BB (see Lee's daily chart)
Markets s/t, i/t overbought, formed perfect inverted handles
Carpino's cycles
Vix hit 52-week low
Dennis, is Carpino looking for lower highs after the Aug. 31, Sept.1 lows or higher highs? |
