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Bond rallies in news void
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November 20, 1998: 9:16 a.m. ET
Dearth of data, move out of short-term Treasurys lift bonds; dollar up
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NEW YORK (CNNfn) - A Friday bone-dry of economic news offered U.S. Treasurys little direction, but bonds climbed as traders continued to mull the prospects of further interest rate cuts by the Federal Reserve.
At around 9 a.m. ET, the 30-year benchmark Treasury issue was up 15/32 in price at 100-21/32 with the yield, which moves inversely, falling to 5.20 percent.
The bond benefitted from selling in shorter-term Treasurys that stems from expectations the Federal Reserve will not follow up on rate cuts of 0.75 percentage points, or 75 basis points, over the past two months.
Traders were also looking ahead to next Monday's auction of $16 billion in two-year notes, which analysts said should enjoy strong demand.
Bond market watchers said a dearth of economic data Friday also kept Treasurys focused on movements in stocks. Over recent weeks, bonds have lost their appeal as buyers flock back onto a rebounding Wall Street.
But bond market fundamentals such as low inflation, collapsing energy prices, and hints of a modest easing in the U.S. economy favored bonds in the long run.
"The market is showing amazing resilience," said William Sullivan, money market strategist with Morgan Stanley Dean Witter.
The Dow Jones industrial average, following up on gains of better than two percent Friday in Tokyo, Frankfurt and London, was seen as ready to open higher - based on early trading in S&P Futures.
"The challenge for Treasurys is what's happening in the global equity arena," he said. "We have had a broad up-sweep in equities of late."
The dollar rallied against the Japanese yen, after Finance Minister Kiichi Miyazawa said his ministry was not planning a widely rumored consumption-tax cut.
That lifted the U.S. currency back over the key 120 level versus the Japanese currency, at 120.55 yen.
The dollar also moved higher against the German mark, as European monetary chiefs and U.S. Fed Chairman Alan Greenspan met by video conference to discuss the new euro currency set for launch early next year.
The mark was recently quoted down about one-half pfennig at 169.19 to the dollar, amid talk by a Bundesbank official about slowdown in Europe.
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