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Japanese yen gains
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April 5, 2001: 9:30 a.m. ET
Hopes for economic recovery plan lift currency vs. dollar; Treasurys fall
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NEW YORK (CNNfn) - The Japanese yen rose against the U.S. dollar Thursday, lifted by hopes that an economic recovery package would bolster Japan's ailing economy.
The dollar bought 124.26 yen by late afternoon in Tokyo, down more than a yen from its late Wednesday level of 125.47 yen.
Stocks on the Nikkei index also rose in anticipation of an emergency economic package to be unveiled by Japan's government and ruling coalition Friday.
The economic package is expected to include measures to boost liquidity in the slumping real estate market, a special fund to absorb sales of shares held by banks, and steps to clean up banks' non-performing loans.
Meanwhile, the dollar gained against the euro, with the euro falling to 89.93 cents from 90.30 cents late Wednesday.
Treasurys move opposite to stocks
U.S. Treasury bond prices edged lower as battered U.S. stocks looked set to recover.
 Shortly after 9:15 a.m. ET, two-year Treasury notes were off 3/32 at 100-6/32, with their yields, which moves opposite to price, rising to 4.14 percent. Five-year notes were down 6/32 at 104-30/32, yielding 4.55 percent.
Benchmark 10-year notes fell 9/32 to 100-12/32 to yield 4.95 percent, and 30-year bonds dropped 4/32 to 98-13/32 to yield 5.48 percent.
"It's all stocks, all the time," said John Santoro, head of governments trading at SG Cowen Securities, explaining the driving force in the bond market this week.
Short-term two-year Treasury notes extended a two-week rally Wednesday as the Standard & Poor's 500 stock index tumbled to its lowest close since October 1998.
But S&P 500 June stock futures were up 22.80 points Thursday morning, signaling a firm opening on Wall Street and sapping some of the Treasury market's recent strength.
Waiting for economic data
But losses were modest as dealers were skeptical the stock market could sustain a rebound and as players girded for the government's non-farm payrolls report Friday, expected to bolster the case for the Federal Reserve to lower interest rates sharply for the fourth time this year.
 "The jobs number is very important. It is the last leg of the three-legged stool that says the economy is slowing," Santoro said.
Two-year note yields hovering near 2-1/2 year floors are an indication that investors are expecting interest rates to fall further. And dealers said an extremely weak jobs report could bolster the case for a rate cut well before the Fed's May 15 policy meeting, sending yields lower still .
"If the number is exceedingly weak, you'll certainly get an inter-meeting cut. And if not, the market will price it in fully whether or not they do it between now and May 15," Santoro said. 
- from staff and wire reports
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