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Bond stalls as Dow soars
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November 23, 1998: 4:05 p.m. ET
Treasurys take a bite in light trading, as stocks steal investor limelight
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NEW YORK (CNNfn) - A potent rally among stocks again squelched interest in U.S. Treasurys Monday, as investors flocked to the growing returns of Wall Street.
At around 3 p.m. ET, the 30-year Treasury issue was down 15/32 in price at 99-31/32 while the yield rose to 5.25 percent.
With the Dow Jones industrial average blasting up to record levels, bonds were relegated to the back seat in the minds of investors. The Dow was up 214.72 points to 9374.27, a record high close, according to preliminary figures.
Bond gains had been built in recent months amid investor jitters about stocks - jitters that are now disappearing.
"The market is kind of thin today," said Tom Ruff, bond trader with Daiwa Securities. "We were up pretty much across the board and out of nowhere, we hit an air pocket."
"Stocks are firm and trading very well - and that's caused some softness in the market [for bonds]," he added.
Also dragging on bonds, he said, was deleveraging by big-ticket investment vehicles known as hedge funds, which have been trying to clean up their balance sheets.
Trading volume was light and that was expected to continue throughout the U.S. holiday week.
A strong dollar, bolstered by political uncertainty that often drives investors into U.S. securities, had rallied bonds early in the day. But the currency didn't build upon its overnight gains.
The dollar held above the key 170 level against the German mark amid concern about the health of Russian President Boris Yeltsin as he recovers from pneumonia.
In late Monday trading the dollar fetched 1.7033 marks. Germany is a key creditor of Russia, and Yeltsin is seen by many investors as a beacon of stability there.
The dollar also got a lift from speculation Germany's Deutsche Bank (FDBK) may need to raise dollars for a planned $9 billion buyout of U.S-based Bankers Trust (BT).
A tense mood lingered in the Persian Gulf, bolstering the dollar, as Iraq refused to supply documents on alleged chemical weapons caches to United Nations inspectors.
The dollar was virtually unchanged against Japan's yen, edging down to 120.96 yen.
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