 |
| A surprise jump in new home sales cooled a morning bond market rally. |
|
| Old conundrum, new twist
|
| Inverted or flat, the yield curve points to a weaker Federal Reserve, not a downturn. (Full story)
|
|
|
|
|
|
|
|
|
|
|
| See how one homeowner is building an energy-efficient house. CNN's Allan Chernoff reports. (August 19) |
Play video
|
|
|
|
NEW YORK (CNN/Money) -
Bonds erased morning gains Wednesday after a government report showing a jump in new home sales offset a disappointing durable goods release that had pushed prices higher in early trading.
The dollar was mixed against the euro and the yen.
Results of the Treasury's $20 billion monthly two-year note auction were termed solid, with participation from overseas buyers especially high.
The benchmark 10-year note was up 2/32 of a point at 100-19/32 to yield 4.18 percent. Thirty-year bond prices were up 3/32 of a point at 114-30/32 to yield 4.39 percent, down from 4.40 in the previous session. The 30-year note had been up nearly half a point before the July home sales report was released. Treasury prices and yields move in opposite directions.
In shorter-dated debt, the five-year gained one tick to yield 4.04 percent, and the two-year note was flat yielding 3.99 percent.
The Commerce Department said new home sales jumped 6.5 percent to a record high in July, defying expectations for a decline. The results helped relieve fears sparked by Tuesday's disappointing report on existing home sales that had led some analysts to speculate that the housing market is cooling.
Real estate sales have helped fuel the economy, boosting home builders and retailers, as well as ramping up consumer spending on home equity loans.
Earlier in the morning, the Commerce Department said new orders for big-ticket durable goods tumbled by a larger-than-expected 4.9 percent in July, the biggest drop since January 2004, as demand for manufactured items fell broadly. Analysts polled by Briefing.com had predicted a 1.5 percent drop in orders.
Bonds rallied on that report, as investors worried that high fuel costs were slowing business spending and wondered whether the Federal Reserve would keep raising interest rates at its next few meetings.
Analysts say a series of "measured" rate hikes has already been priced into both the bond and currency markets.
In the Treasury's $20 billion two-year note auction, the note was awarded at 4.014 percent, in line with expectations. Indirect bidders, a category that includes foreign central banks, picked up 41.8 percent of the issue, the highest since November.
"It was a good auction but not great. We'll get some support out of this for a while," said one bond trader at a Wall Street primary dealer.
In currency, the dollar turned lower against the euro after disappointing durable goods sales clouded the outlook for more rate hikes. Rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors.
The euro bought $1.2272, up from $1.2226 late Tuesday. The dollar was higher against the euro before the durables report was released. The dollar bought ¥110.17, up from ¥109.97 in the previous session.
________________________
Readers think oil prices are hurting their wallets. Click here to read their gripes.
Click here for updated bond charts.
--from staff and wire reports
|
