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Bonds edge up quietly
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December 7, 1998: 9:32 a.m. ET
Traders shrug off rumors Rubin will quit; quiet Wall St., dollar gains help
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NEW YORK (CNNfn) - U.S. Treasurys climbed early Monday, backed by a stronger dollar and rising amid extremely light trade that may cause more erratic swings in bond prices.
Shortly after 9 a.m. ET, the 30-year benchmark Treasury was up 16/32 in price at 103-21/32, while the yield, which moves in the opposite direction, fell to 5.01 percent.
What appeared to be a flat open on Wall Street gave bonds breathing room Monday.
Rate cuts in China and Hong Kong helped rally stocks across Asia, but there were few signs of positive spillover for U.S. stocks early Monday.
The Dow Jones industrial average, a key driver of bond prices recently as investors shift their cash between stocks and Treasurys, was set for a slightly higher open Monday, based on early S&P Futures trading.
A stronger dollar helped prop up the bond. The dollar climbed slightly to 119.70 against the Japanese yen, as Japanese Prime Minister Keizo Obuchi expressed his strong opposition to cutting the 5 percent consumption tax. Many analysts say such a cut would help revive a lagging Japanese economy.
The greenback climbed against the yen despite an unconfirmed overnight report in Japan that U.S. Treasury Secretary Robert Rubin told President Clinton he wants to resign.
Japan's Sankei Shimbun reported Rubin sounded out Clinton about resigning his post, but that the President had asked him to stay.
But bond futures traders in Chicago said they're looking at the report with a good deal of suspicion.
"I don't think it has done anything," said a trader. "Nobody is taking this too seriously."
With no major U.S. economic data set for release Monday, trading volume was light as evidenced by the fact that in the bond pit "you see the sports pages coming out," on Monday morning, the trader said.
Bond traders still were focusing on last Friday's stronger-than-expected employment report, which may linger in traders minds until late-week reports on wholesale trade, retail sales and producer prices.
The dollar climbed about a half-pfennig to 1.68 German marks. With less than a month to go before 11 nations in Europe launch their new "euro" currency, European Central Bank President Wim Duisenberg told the British daily Financial Times he doesn't rule out the euro being a strong currency, but added that the currency shouldn't be allowed to undermine European competitiveness.
-- from staff and wire reports
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