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Bonds seek firm direction
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May 5, 1999: 9:19 a.m. ET
Uncertainty, mixed dollar leave Treasuries jumping at faintest stirring
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NEW YORK (CNNfn) - The U.S. bond market got a weak bounce Wednesday morning, although traders were still casting about for firm direction after several big retreats in recent days.
Shortly before 9 a.m. ET, the benchmark 30-year Treasury bond was up 2/32 of a point in price at 93-15/32, driving the yield back down to 5.70 percent.
Sentiment was still grim after the long bond yield hit a nine-month high Tuesday, breaking through key support levels. A dearth of economic data has left bonds drifting in the last few weeks, as traders sell Treasury debt for lack of any firm reason to increase their holdings.
Following Tuesday's uncertainty, key market participants were mesmerized by the Treasury Department's upcoming refunding announcement. The Treasury is set to reveal details of its next quarterly sale of 5- and 10-year paper at 9:30 a.m. ET, giving the market some indication of supply levels ahead. There will be no auction of 30-year bonds this quarter.
Market participants are waiting to see if the Treasury will confirm rumors that it will decrease the frequency of debt auctions. If so, traders hope the supply of fresh Treasury debt will ease, boosting prices as investors compete for those bonds that remain.
Meanwhile, traders were eagerly looking forward to the smallest scraps of economic data, clutching at indicators they would ordinarily ignore in their need to gauge the market's direction.
The Commerce Department is set to release March factory orders numbers at 10 a.m. ET. Economists have forecast a dramatic recovery in the statistic to show a 1.2 percent increase where February's figure shrank by 2.5 percent.
The Federal Reserve is also set to release its "Beige Book" report on the overall state of the U.S. economy early in the afternoon.
Euro turns aggressive
Bond traders found some comfort in currency markets, where the dollar retreated from the euro and gained only minimal ground on the yen.
Traders said the euro was enjoying a premature peace dividend as investors bought the rumor of a diplomatic solution to Balkan conflict. Shortly before 9 a.m. ET, the European currency surged to $1.0664, having closed Tuesday at an intraday high of $1.063.
According to the Financial Times, Yugoslav President Slobodan Milosevic is now negotiating conditions under which United Nations forces will be allowed to enter the breakaway Yugoslav province of Kosovo. War between Yugoslavia and NATO, now in its second month, has forced investors to the security of the dollar, helping push the euro to lifetime lows.
Yen trading remained uninspired as global investors abstained from both the Japanese stock market, closed for the last day of the "Golden Week" holidays, and U.S. stocks, which sank from record highs Tuesday.
The dollar continued its struggle with the 121-yen level, edging up to 121.02 yen in early U.S. trading.
The global ebb and flow of capital into stocks has driven yen markets since March, when Japanese investors parked their funds back in yen-denominated securities ahead of their country's fiscal new year on April 1. In April, international traders picked up the tempo, throwing dollars at the rallying Tokyo stock market. 
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