NEW YORK (CNN/Money) - Treasury prices rose for a third consecutive day Tuesday as falling consumer confidence and sharply lower equities supported views that higher interest rates are far in the future.
Yields fell to another set of eight-month lows for longer-dated maturities.
At around 3:30 p.m. ET, the benchmark 10-year note rose 12/32 to 102-9/32 to yield 3.72 percent, down from 3.78 percent late Monday, and the 30-year bond added 17/32 of a point to 110-19/32 to yield 4.68 percent, down from Monday's 4.72 percent.
The two-year note rose 1/32 of a point to 100-9/32 to yield 1.48 percent, while the five-year note gained 7/32 to 101-19/32 to yield 2.66 percent. Bond prices and yields move in opposite directions.
In the currency market, the dollar traded higher against the yen and euro as buyers were reluctant to pick up the European currency even after last week's disappointing U.S. employment figures.
The euro traded at $1.2291, down from 1.2408 late Monday. Last week, the euro hit three-month lows around $1.2056. In February, it hit record highs above $1.2900.
Against the yen, the dollar traded at ¥111.45, up from ¥111.16 on Monday, after taking a one-yen tumble during Monday's New York session on talk that Japanese authorities had eased off recent yen-weakening intervention.
Tuesday's Investors Business Daily/TechnoMetrica economic optimism index slipped to a six-month low of 54.5 in March from 56.5 in February. A reading above 50 indicates optimism.
The survey correlates closely with other confidence readings, such as the Conference Board and University of Michigan reports.
Fixed-income markets are in the midst of a shift triggered by dealers who had expected interest rates to start grinding higher but were caught off balance by Friday's weak February payrolls report. Now, many look for rates to fall further.
Falling interest rates are expected to spur homeowners to refinance their mortgages, especially those who missed out on the refinancing binge in mid-2003.
Mortgage-backed securities dealers "are being obligated to buy Treasurys to hedge against the prepayment risks that seem to be escalating," said William Sullivan, executive director and economist at Morgan Stanley.
The Treasury auctions $16 billion of new five-year notes on Wednesday and $11 billion of reopened 10-year paper on Thursday. Traders are hopeful that Asian central banks will once again be active buyers.
Analysts said a string of weak monthly payroll reports is eroding Americans' confidence.
"Poor employment trends clearly are weighing on sentiment," said Alan Ruskin, chief economist at 4CAST. "The (IBD) data is consistent with a meaningful decline in the Michigan survey."
The University of Michigan's first consumer survey for March is due on Friday. A survey of economists taken last Friday called for a small increase from February's 94.4 reading.
Retail sales data for February, due on Thursday, are expected to be solid, but dealers are already fretting about March.
Weekly chain store sales from Redbook and the International Council of Shopping Centers/UBS sagged for the week ended March 6 and have been off the boil for a few weeks.
"Better weather and larger tax refunds are fighting with slow growth in jobs and wage income to determine the strength of consumer spending. Right now, it's about a tie," said Stephen Wood, economist at Insight Economics.
Expectations of a Federal Reserve rate increase slipped again, and the odds of a central bank move before the end of October are now below 50 percent, according to Chicago Board of Trade Fed funds futures.
-- from staff and wire reports
|
