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Treasury traders cash out
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February 17, 1999: 9:10 a.m. ET
Both bonds and dollar slip on profit taking, economic data ahead
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NEW YORK (CNNfn) - U.S. bond prices deflated Wednesday after still-edgy investors took advantage of uninspiring domestic economic data as an excuse to lock in some recent gains.
The benchmark 30-year Treasury bond was trading down 7/32 of a point at 98-10/32 by 9:00 a.m. ET, while the yield inched up to 5.35 percent.
The low end of the yield curve, which had seen its share of profit-taking late Tuesday, remained steadier, with two-year notes unchanged at 99-8/32, yielding 4.90 percent.
Traders said the bond market was edging lower to allow players time to consolidate their positions after Tuesday's rally and ahead of the remainder of the week's moderately full plate of economic indicators.
Growth high, inflation low?
The first of Wednesday's data releases, January housing starts, painted a picture of continuing strength in the construction sector, leaving bond traders profoundly unimpressed.
The next release to hit the market will be the January industrial production report at 9:15 a.m. ET, which economists expect to show a flat 0.2 percent rate of growth.
Also due later in the week are producer and consumer price indexes, which allow bond dealers to gauge inflationary pressures that can in turn depress demand for bonds and other fixed-income securities.
Economists predict that Thursday's producer price index will return to a milder rate of increase after tobacco price increases skewed last month's data.
Traders also said that renewed doubt over the health of Japan's bond market had encouraged some overseas Treasury selling overnight.
On the other hand, expectations of a weak opening for U.S. stocks were seen as giving the Treasury market some staying power.
Dollar turns to stone
In currency markets, profit taking also drained the dollar of upward momentum against both yen and euro, leaving the greenback stuck but still within sight of recent highs.
Against the yen, the dollar was virtually unchanged from its previous close at 118.76 yen.
The euro took advantage of the U.S. currency's inertia, climbing to $1.1238 from its previous close of $1.1203.
Traders said the market was cooling off ahead of a weekend meeting of the Group of Seven (G7) industrialized nations, with an 11:00 a.m. ET press conference with U.S. Treasury Secretary Robert Rubin expected to feed advance interest. 
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