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Bonds lose a bit of steam
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August 11, 1998: 3:24 p.m. ET
Debt refunding pulls bonds off their blustery morning gains as yen cools
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NEW YORK (CNNfn) - A frenzied rush out of stocks and into U.S. Treasurys early Tuesday eased in the afternoon as a first wave of a U.S. debt refunding braked the bond's speedy rise.
The 30-year benchmark Treasury issue peeled back from early gains but still was up 12/32 in price for a yield of 5.60 percent at the close of U.S. trading.
That was near the lows of the day, after the bond rose by as much as 30/32 in price in the early going.
Investors, seeking a safe haven for their money, flocked to the bond market after an overnight dip in the Japanese yen to eight-year lows spurred a wave of stock selling worldwide.
The Japanese yen hovered in a narrow band Tuesday in U.S. trading after falling as low as 147.63 to the dollar overnight.
The yen was recently quoted at 147.36 to the dollar, up only slightly from the low.
The gains in Treasurys early on made a positive setting for the start of a whopping $37 billion refunding of U.S. government debt.
Early signs suggested Tuesday's auction of $16 billion in five-year notes was choppy but successful, traders said. The bond market was expected to face an auction of $11 billion of 9-3/4 year notes Wednesday.
Analysts said the bond market may be the determinant of whether the bull run in stocks is nearing an end.
"The fact that the bond market is rallying today is a plus," said John Manley, a stock strategist with Salomon Smith Barney. "If this ends up being a bear market, it will be one of the first ever that began when interest rates are down."
The German mark, which has been sidelined amid the Asia-related economic woes, was off slightly at 1.7804 to the dollar. 
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