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Bonds wade into deep water
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May 6, 1999: 9:15 a.m. ET
Fear of Greenspan, ambiguous dollar activity push Treasurys into retreat
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NEW YORK (CNNfn) - The bond market opened in a bad mood Thursday, falling as traders turned away from economic data to sell before a looming speech by Alan Greenspan and the opening of the stock market.
Shortly before 9 a.m. ET, the benchmark 30-year Treasury bond was down 18/32 of a point in price at 92-29/32, yielding 5.74 percent.
Trading activity was thin and reactive, betraying the market's raw nerves following several days of roller-coaster volatility that pushed the long bond yield up 8 basis points so far this month.
The bond market's sentiment was reflected in its reaction to a seemingly benign initial jobless claims report. Although first-time claims rose more dramatically in the previous week than economists had forecast, bond bulls still found little enthusiasm for adding to their portfolios.
Instead, some traders were looking ahead to the opening of U.S. stock trading for technical guidance, but most were waiting for Federal Reserve Chairman Alan Greenspan to speak at 9:25 a.m. ET, shortly before the start of Wall Street's trading day.
Greenspan is set to lecture the Chicago Federal Reserve on "Global Financial Crises," a sufficiently broad topic for him to hint at his current economic policies, should he so wish. Many in the bond market would be deeply appreciative for any scraps from Greenspan's table, as the directionless trading of recent weeks has only fueled fears that interest rates are on a rising track.
Greenspan and the Federal Open Market Committee (FOMC) he chairs will next meet to set U.S. rate policy May 18.
Dollar in the middle
Traders looking to currency markets for strategic direction found the omens ambiguous at best with the euro continuing its three-day rally against the dollar while the yen weakened.
The euro climbed Thursday to $1.0805, almost effortlessly hurdling the $1.08 level it abandoned three weeks ago as hope for peace in the Balkans built on support offered earlier in the week by European banking chief Wim Duisenberg.
However, the European currency seemed to be braking its rally, slowing as traders digested the results of a Bonn meeting of the Group of Eight (G8) industrialized nations. The G8, which comprise the Group of Seven plus Russia, said they had "agreed to a common strategy" for handling civil conflict in Yugoslavia, but few details were immediately forthcoming.
War between NATO and Yugoslav forces, now well into its second month, has helped push the euro into a deep retreat, as investors fleeing the uncertainties on united Europe's borders parked their cash in the relative safety of dollars.
Meanwhile, dollar bulls joined their brethren in the bond market in watching Greenspan. The dollar has firmed recently in response to a blockbuster rally in U.S. stocks, but speculation that the Fed chief will knock stocks directly or indirectly kept the currency market subdued.
The dollar has made especially strong gains against the yen in recent sessions as global traders funnel money into greenbacks in order to buy onto Wall Street. However, a competing surge on the Tokyo stock market could derail the dollar's gains, particularly if U.S. stocks falter.
In early U.S. trading, the dollar remained thinly higher against the Japanese currency, trading at 120.92 yen. 
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