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To: Peter Dierks who wrote (30)	4/20/2006 12:34:12 PM
From: richardred	Read Replies (1) \| Respond to of 340

Treasurys flatten after soft Philly Fed E-mail \| Print \| RSS Feed \| Disable live quotes By Leslie Wines, MarketWatch Last Update: 12:21 PM ET Apr 20, 2006 NEW YORK (MarketWatch) -- Treasury prices flattened at noon Thursday, with yields holding steady above 5%, after muted market reaction to softer-than-expected monthly leading economic indicators and a below-consensus reading of the Philadelphia Federal Reserve's latest manufacturing survey. The benchmark 10-year Treasury note last was flat at 95-31/32 with a yield ($TNX : CBOE 10-Year Treasury Yield Index The Philadelphia Fed said its headline index of factory activity rose to 13.2 in April from 12.3 in March. The increase was below expectations of economists polled by MarketWatch for a rise to 14.6. Although the result did not meet projections, all reading above zero indicate expansion. Separately, the Conference Board said that its index of leading economic indicators fell 0.1% in March, the second straight monthly decline. "The latest leading indicator readings suggest some slowing in the pace of economic activity through this summer," said Ken Goldstein, an economist for the research group Dealers said investor reaction to the index was restrained Thursday, after fairly heavy selling the day before due to a brisker-than-expected increase in consumer level inflation. The latest CPI report dented hopes for a speedy end to the Federal Reserve's current rate-tightening cycle, although economists pointed out that most of the gain was linked to the higher rentals that have resulted from a slowing housing market. Matthew Smith, portfolio manager at Smith Affiliated Capital, predicted Treasury price ranges will be tight ahead of the next Fed monetary policy meeting on May 10 as that there are a number of important data reports for the market to absorb between now and then, including another monthly employment report. Earlier the Labor Department reported that the number of initial claims in the week to April 15 fell 10,000 to 303,000. The consensus forecast of Wall Street economists polled by MarketWatch was for claims to inch lower by 3,000 to 310,000. The fixed-income market reacts negatively to indications of a robust labor market because this type of data supports the case for an aggressive Federal Reserve monetary policy. The market anticipates the Federal Reserve will lift the overnight rate by a quarter point to 5% at its May meeting, but investors are confused about the path of monetary policy after that point. The Fed has been putting in steady, quarter-point increases since June, 2004. Later in the day Fed Chairman Ben Bernanke will give a speech on community development issues. Fed speakers in recent weeks have made clear that future rate decisions will be linked to economic data. End of Story marketwatch.com