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Dollar bounce lifts bond
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November 10, 1998: 9:17 a.m. ET
Gain against yen, weak world stocks also revive safe haven lure of Treasurys
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NEW YORK (CNNfn) - U.S. Treasury prices climbed Tuesday as a second day of stock-market slump seemed likely and the dollar bounded up against Japan's yen.
At around 9 a.m. ET Tuesday, the 30-year benchmark Treasury was up 23/32 in price at 100-2/32 as the yield, which moves in the opposite direction, slipped to 5.24 percent.
A worldwide stock sell-off revived the appeal of bonds, by driving investors to the relative safety of Treasury issues. Shorter-term Treasury bills and notes also were higher early Tuesday.
Key Asian and European markets were lower Tuesday, and based on S&P Futures trading the Dow Jones industrial average was expected to head lower as well.
A report on retail sales later this week was one of the few blips on the economic radar screen before a meeting of Federal Reserve policy makers next Tuesday. Analysts said the chances of a rate cut has faded slightly as Wall Street stocks have gained and the recent credit crunch has eased.
Also buoying bonds was the dollar's continued rebound to its highest level in a month against the Japanese yen. The U.S. greenback climbed past the 123 level but recently was quoted at 122.54, up more than a half-yen.
Retreating signs that world market woes would hurt the U.S. economy bolstered the dollar, while doubts linger over Japan's effort at banking and fiscal reform. A stronger dollar increases the appeal of dollar-denominated assets.
"We believe the general fundamentals are coming back somewhat," said Seth Garrett, head of currency exchange trading at CS First Boston.
"Japan has a lot of issues, and the dollar recovery, while it surprised some people, we were expecting this to happen at some point as the panic in the market subsided," he added.
Japanese investors still are interested in investing abroad and demand for dollars is high, added Garrett.
Meanwhile, Germany's mark held up against the U.S. greenback as traders said there were few indications the dollar would move past 1.70 marks.
The dollar fetched 1.6814 marks Tuesday.
Hints that the Fed may hold the line on interest rates -- which was unthinkable only several weeks ago -- kept the dollar stronger against the mark, analysts said. 
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