Markets & Stocks > Bonds & Rates
Bonds, dollar inch higher
Treasurys gain on consumer sentiment drop, while dollar rebounds on euro profit-taking.
February 13, 2004: 3:44 PM EST

NEW YORK (CNN/Money) - Treasury prices rose Friday, boosted by a steep drop in a U.S. consumer sentiment reading and a safety bid spurred by brief evacuations of a New Jersey postal facility and two U.S. Senate office buildings.

The benchmark 10-year note gained 8/32 of a point to 99-21/32 to yield 4.04 percent, down from 4.06 late Thursday. The 30-year bond rose 6/32 to 106-24/32 to yield 4.92 percent, down from 4.94 late Thursday.

The two-year note climbed 2/32 of a point to 100-12/32 to yield 1.68 percent, and the five-year note added 7/32 to 100 even with a yield of 3.00 percent.

In the currency market, the dollar rallied in volatile trading amid a wave of some unusually strong profit-taking in euros after the U.S. currency fell steeply on a report of a widened U.S. trade deficit and a surprisingly weak consumer sentiment survey.

The dollar had earlier fallen sharply under the weight of a trade deficit that grew nearly 11 percent in December to $42.48 billion, more than a median analyst forecast for $40 billion. Then news of a steep decline in consumer sentiment sent the euro a little higher, before it was repelled just below its lifetime high of $1.2898.

In mid-afternoon trading in New York, the euro bought $1.2738, down from $1.2807 late Thursday, and the dollar purchased 105.48, up slightly from 105.40 on Thursday.

Two Senate office buildings were evacuated on Friday because of a smell of smoke, a Capitol Police spokeswoman said. A postal facility in Jersey City, N.J. also was evacuated Friday morning after the discovery of a suspicious powdery substance, the local fire department said on local radio.

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"With the post office story and then the talk about the Senate office buildings being evacuated, sure, that got the market re-bid again," said John Spinello, fixed-income strategist at Merrill Lynch Government Securities.

The Capitol police later said a false alarm prompted the evacuation of the Senate office buildings, and the New Jersey post office was re-opened after a two-hour shutdown when concerns over the discovery of the powder were dispelled.

Prices started the session higher Friday, aided by foreign demand and relief after the government's $56.0 billion three-auction quarterly financing finished profitably for dealers.

News that the University of Michigan's index of consumer confidence slumped to 93.1 in February, reversing all of January's hefty rise to 103.8, further boosted the market.

"It's definitely good for bonds," noted Ram Bhagavatula, chief economist at Royal Bank of Scotland Financial Markets.

He and other analysts, however, downplayed the report's significance for the economy.

"We should still have a pretty good quarter for consumer spending," said Josh Stiles, senior bond strategist at IDEAglobal. "January retail sales, excluding autos, were very strong."

Periodic rounds of profit-taking trimmed some gains.  Top of page

-- Reuters contributed to the story

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