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Pastimes : The Justa and Lars Honors Bob Brinker Investment Club Thread -- Ignore unavailable to you. Want to Upgrade?

To: Boca_PETE who wrote (1557)	10/31/2001 11:42:39 AM
From: Sam	Read Replies (1) \| Respond to of 10065

T-Bonds Fly Up After New Sales Cancelled NEW YORK (Reuters) - U.S. Treasury bonds flew higher on Wednesday, pushing yields under 5 percent, to the lowest levels since December 1998, after the Treasury Department said it no longer would issue 30-year Treasury bonds. The announcement triggered a scarcity bid in existing paper. The move was one of the biggest ever in 30-year bond prices. Market players compared the sudden upward jolt to the rally during the 1987 stock market crash and the climb in February 2000, when the Treasury announced details of its buyback program, which has taken $57.5 billion of older bonds out of the market. ``I can't remember the last time we had a five-point rally,'' said Jim Claire, director of fixed income trading at Evergreen Institutional Investments in Charlotte, North Carolina. ``I used this as an opportunity to punt out some long bonds because I don't think this level's going to stay,'' he added. In its quarterly refunding announcement, the Treasury said it would sell no more 30-year nominal or inflation-indexed bonds, taking the market by surprise. The sharp rally in bonds narrowed the gap between yields on two-year notes and bonds to 247 basis points, the narrowest since mid-September, when two-year note yields sank after the Sept. 11 attacks. ``We do not need the 30-year bond to meet the government's current financing needs, nor those that we expect to face in the coming years,'' Peter Fisher, the U.S. Treasury's Under Secretary for Domestic Finance, told reporters at the department's quarterly press conference to lay out details of note auctions next week. ``There's no more bonds,'' said Drew Forbes, trader at Daiwa Securities in New York, as investors piled into longer-dated securities, causing the yield curve that maps yields on different maturities to flatten. At 10:50 a.m. EST, 30-year bonds stood almost 4 full points higher (US30YT-RR) at 105-31/32, yielding 4.98 percent. Two-year notes (US2YT-RR) were off 5/32, compared with their 5 p.m. Tuesday closing levels, at 100-14/32, yielding 2.53 percent. Five-year notes (US5YT-RR) fell 6/32 to 104-4/32, yielding 3.63 percent. Benchmark 10-year notes (US10YT-RR) were up 7/32 to 104-26/32, yielding 4.39 percent, just above a three-year low. Earlier, shorter-dated U.S. Treasuries slid after the government said the economy shrank by 0.4 percent in the third quarter, the most since the last recession in 1991, but far less than expected. The government's advance estimate of gross domestic product showed a much milder contraction in the economy than the 1.0 percent economists had feared, scaling back some investors' hopes for more aggressive Federal Reserve interest rate cuts. But bond investors said the GDP data had not altered market expectations of bond-supportive weak economic data this week, including an expected dismal report on the U.S. employment situation on Friday. Short-dated yields hit historic lows on Tuesday following a report that showed consumer confidence took a steep fall in October, boding poorly for consumer spending in the months ahead. biz.yahoo.com