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Bonds hold their ground
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February 11, 1999: 3:23 p.m. ET
Auction gives the long bond a bounce at last, while the dollar keeps drifting
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NEW YORK (CNNfn) - Treasury markets defied a rebound on Wall Street Thursday, climbing higher after a 30-year bond sale received surprisingly robust buying attention.
By 3:00 p.m. ET, the benchmark 30-year bond was up 10/32 of a point at 98-19/32, while the yield retreated to 5.34 percent.
Traders attributed the bounce to better-than-expected demand at the afternoon's $10 billion long bond refunding, which they called the best this week.
The sale resulted in an offering price of 99-9/32 for 30-year bonds maturing Feb. 15, 2029.
The new bonds priced at a high yield of 5.298 percent, the lowest since regular 30-year bond auctions began two years ago and an encouraging indication that global demand for Treasury issues remains strong.
In addition, the Treasury received 2.05 times as many bids as it had debt to sell, another sign of healthy interest and broadly in line with demand for Tuesday's sale of $15 billion in 5-year notes and Wednesday's $10 billion in 10-year notes.
Greenspan, Dow dent buying
Away from the auction, traders said bond prices had fallen slightly during comments from Alan Greenspan, but the weakness was strictly on jitters and was quickly corrected when it became obvious that the speech had little relevance to the U.S. economy.
"The market traded off once Greenspan began speaking and said nothing on the economy," said Joel Kent, economist at Lehman Brothers.
A burst of buying on Wall Street posed a more serious impediment to the bond market, which usually sees bond prices fall as stock-bullish investors move funds into rallying equities.
Although NationsBank Chief Economist Mickey Levy said the resurgent stock market had kept bonds off the heights of their auction-inspired euphoria, he noted that the day's refunding demand was not surprising.
"With the bond at these levels, yielding 5.37 percent, we haven't seen levels this high in months," he said, pointing to the creeping increase in long bond yields, up more than 20 basis points so far this year.
Dollar hesitates
Lacking a refunding auction of their own, dollar markets extended their drift from the morning as traders were wary of taking strong positions ahead of a crucial Japanese monetary policy meeting.
The dollar traded at 114.62 by 3:00 p.m. ET, up only slightly from its previous close of 114.40.
The greenback enjoyed more robust strength against the euro, with the European currency sliding to $1.1235 from its previous close of $1.1325.
Traders pointed to the holiday closure of Japanese financial markets overnight as a reason for the day's lack of activity.
However, the markets will reopen Friday, at which time the Bank of Japan's monetary policy board will also meet to determine Japanese interest rates.
Although Japan's prime discount rate has remained at a record low of 0.50 percent for the last 3-1/2 years, global traders said speculation is growing that the board will cut the rate -- or the closely-linked overnight call rate -- to curb rising long-term interest rates. 
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