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Strategies & Market Trends : MDA - Market Direction Analysis -- Ignore unavailable to you. Want to Upgrade?

To: Haim R. Branisteanu who wrote (16454)	6/8/1999 7:39:00 PM
From: Les H	Read Replies (2) \| Respond to of 99985

No rush to buy 6.0 pct bond NEW YORK, June 8 (Reuters) - U.S. Treasury bond yields hit 6.0 percent for the first time since May 1998 on Tuesday, but the session's poor price action will likely discourage any buyer heroics for now, traders said. ''I think that if we were here and stable then we would probably see a fair amount of buying going on,'' a trader at a U.S. primary dealership said. ''But the fact is we are here and it feels like we could break down and make another leg down, and guys are kind of afraid of putting their foot in.'' The trader added that some big names being bandied about on the sell side -- true or not -- will likely deter some smaller buyers. ''The smaller guys are like I'm not going to buy anything if these guys are selling, because they must know something,'' the trader said. ''So there is a little bit of a herd mentality in that sense.'' A trader at another U.S. primary dealership said while much has been made of the 'magic' 6.0 percent bond yield, he personally ascribed little significance to it. ''Everyone's been talking about 6.0 percent, you are there,'' he said. ''Now guys are talking about 6.09 or something on the bond charts. Well, there's certainly a possibility we go back there. Long zeros are trading in the 6.40s. They haven't been that cheap in years.'' The market is certainly getting fully priced for a Federal Reserve rate hike, he said. ''And we'll see if it needs to get even more fully priced,'' the trader said. ''I mean the risk is that the market has a lot more downside.'' Six percent bond yields aside, Treasuries will likely eye fresh supply from other debt markets as well as currency moves on Wednesday, according to Tony Crescenzi, chief bond market strategist at Miller Tabak Hirsch & Co. When dealers launch new issues, they often sell Treasuries as a hedge, buying them back once the deal is priced. While that may help Treasuries on Wednesday, the ultimate effect of supply from other markets -- especially agencies -- is negative, Crescenzi said.