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Treasurys move higher
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June 22, 2000: 9:31 a.m. ET
Market remains jittery ahead of Fed meeting; dollar falls against yen
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NEW YORK (CNNfn) - Treasury securities rose early Thursday with the Federal Reserve's monetary policy meeting looming next week but little relief coming from an announced oil output increase by the Organization of Petroleum Exporting Countries.
The dollar slipped against the yen but strengthened versus the euro.
"I don't expect the market to do a whole lot," said Dennis Hynes, chief bond market strategist at R.W. Pressprich. "With oil above $31 (a barrel) even after OPEC agreeing (to raise production), it does tell you that the inflation bell is ringing, so I do think you need to be concerned about that."
If inflation takes hold and interest rates move higher, bond yields will rise while bond prices will fall.
 Around 9 a.m. ET, the price of the 10-year note rose 1/16 to 102-27/32. Its yield, which moves inversely to its price, fell to 6.10 percent from 6.11 percent Wednesday. The 30-year bond gained 1/16 to 103-31/32, its yield unchanged at 5.96 percent.
"We're really just in a trading range ahead of next Tuesday, but the trend is basically bullish," Hynes said, referring to the upcoming Fed meeting.
Analysts said the government's two-year note auction and debt buyback already have been factored into the market. The debt buyback is based on 30-year bonds and is part of a program aimed at cutting the government's debt burden.
Fed and oil in focus
The market is keen to get past the next Federal Reserve meeting with no change in monetary policy. Analysts expect no interest rate hikes at the June 27-28 meeting, but say the market will hold its breath until the meeting ends.
Mike Ryan, senior bond analyst at Paine Webber, said he didn't think the Federal Reserve would make any changes to its monetary policy but he cautioned that the market should not look for a huge relief rally if interest rates remain unchanged.
Meanwhile, OPEC ministers agreed to raise oil production by 708,000 barrels a day, or roughly 3 percent. This will lift output to 25.4 million barrels per day from 24.7 million barrels.
"For the bond market, it's clearly not bullish," said Ryan. "At a time where growth is strong, the labor market is still tight, and price pressures are building, the last thing you need is a surge in energy prices that will push inflation up across the board."
Prices for crude oil for August delivery rose 24 cents to $29.57 a barrel on London's International Petroleum Exchange. The leading U.S. benchmark index for light sweet crude had not yet opened for the day.
Dollar mixed
The dollar gained against the euro but weakened modestly versus the yen. The market is waiting for news about the Bank of Japan's monetary policy outlook and whether or not inflation is under control.
 Around 9:15 a.m. ET, the euro fell to 94.27 cents from 94.54 cents Wednesday. The dollar fell to 104.40 yen from 105.57 yen.
"Market expectations of steady European interest rates throughout the summer combined with an ongoing technical retracement remained the catalysts for the euro's renewed weakness," wrote Alex Beuzelin, market analyst at Ruesch International, in a note to clients. " No major U.S. data is due out today. Technical factors should continue to play a determining role in the dollar's fluctuations." 
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