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Bond prices slump
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August 2, 2000: 3:31 p.m. ET
30-year issues falter after Treasury refunding announcement; dollar mixed
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bond prices sagged Wednesday after the government said in its quarterly refunding announcement that it did not plan to make any changes in its debt issuance.
In the currency markets, the dollar declined against the yen but rose against the euro.
Shortly after 3 p.m. ET, the 30-year bond fell 19/32 to 106-26/32. The yield,  which moves in the opposite direction to price, rose to 5.76 percent from 5.74 percent Tuesday.
The 10-year Treasury note, considered the benchmark, rose 3/32 of a point in price to 103-24/32, its yield retreating to 5.97 percent from 5.99 percent.
Treasury official Gary Gensler said early Wednesday there was no need for more changes in the government's pattern of debt issuance. Recent speculation that the government may eliminate the 30-year bond had supported longer-dated securities.
Prior to the announcement, some traders bought these securities in a bet that the Treasury would end the issue. As a result, those traders had to adjust their positions.
"The pre-auction announcement speculation was the cause for the rapid  sell-off in the 30-year bond," said Richard Yamarone, senior economist at Argus Research Corp.
As expected, the Treasury said it will sell $25 billion of new debt in five- and 10-year notes and 30-year bonds in its refunding auctions next week.
A record agency bond sale
A record agency debt sale from Fannie Mae (FNM: Research, Estimates), the nation's largest mortgage provider, also pressured Treasurys. Fannie Mae sold $11.5 billion in two- and 10-year notes and 30-year bonds.
Due to strong demand, the amount was hiked from the $10 billion originally planned. The sale follows Germany's Deutsche Telekom's record $14.5 billion corporate bond issuance in June.
Corporate and agency bonds are seen as attractive due to their higher yields, and can draw investors away from government securities.
The market's losses came despite a weaker-than-expected report on the U.S. housing market. New home sales fell 3.7 percent to an annual rate of 829,000 in June, the lowest level since December 1997, the Commerce Department reported.
The number was far lower than consensus estimates of an 868,000 annual rate.
In a separate report, leading economic indicators -- which forecast economic activity six to nine months ahead -- were unchanged in June compared with a 0.1 percent decline in May, according to the Conference Board.
Recent economic data have been highly scrutinized as the next Fed policy meeting on Aug 22 approaches. Many analysts believe the central bank's tightening campaign -- six rate hikes in the past 13 months - is near its end.
Dollar mixed
The dollar was mixed against the major currencies Wednesday. Analysts said there was no major catalyst driving the dollar lower against the yen.
The euro remained weak, after hitting a two-month low against the dollar Tuesday. Analysts said negative sentiment continued for Europe's single  currency.
Policy decisions from both the Bank of England and the European Central Bank (ECB) are expected Thursday.
"The consensus is the Bank of England will leave rates unchanged," said Bob Lynch, currency strategist at BNP Paribas. Analysts also forecast no policy changes by the ECB.
Shortly after 3 p.m. ET, the dollar traded at 108.97 yen, down from 109.39 yen Tuesday, a 0.4 percent loss in the dollar's value. The euro was at 91.28 cents, down from 91.45 cents Tuesday. 
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