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Treasurys sigh at AT&T news
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March 22, 1999: 3:36 p.m. ET
Dollar takes advantage of Tokyo holiday while AT&T gives bonds room to breathe
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NEW YORK (CNNfn) - Treasury bond prices abandoned an abortive early rally Monday afternoon, deepening morning losses after investors digested news about a massive corporate debt offering on the horizon.
By 3:00 p.m. ET, the benchmark 30-year Treasury bond was down 11/32 of a point in price at 95-4/32, sending the yield up to 5.56 percent.
Traders said the market had shaken off its initial relief that telecommunications giant AT&T (T) plans to issue a record $7 billion in corporate debt within the next few days. The company had initially planned a smaller offering of between $5 billion and $6 billion, but rumors and speculation had led Treasury bond investors to fear a float of $10 billion or more.
The bond market is already groaning under the weight of last month's $35 billion Treasury refunding, which left institutional dealers saddled with the bulk of the new issue in the face of limited retail demand.
Few other factors
Other than the lingering fears over the AT&T float flooding the market, Treasury bond traders sought direction in gloomy technical factors.
Economists noted that long bond yields had broken a key level of technical support Friday by climbing past 5.50 percent, rendering a bond rally unlikely in the near term.
The next major U.S. economic release is Wednesday's report on February durable goods orders. Although Federal Reserve Chairman Alan Greenspan is set to give Congressional testimony Tuesday, the meeting will be closed to the public and as such is unlikely to directly affect the bond market.
The Treasury is also scheduled to auction off $15 billion in two-year debt Wednesday, giving savvy bond traders a gauge of ongoing investor demand for government debt while forcing the market to make room for the fresh paper.
Dollar plays while Tokyo sleeps
A market holiday in Japan interrupted the flood of global cash into yen-denominated securities, allowing dollar bulls free reign again for the first time since last Wednesday. By 3:00 p.m., the greenback had climbed more than a full yen from its weekend lows to 118.09 yen.
Newfound optimism in the outlook for the Japanese economy has lifted Tokyo stocks 18 percent over the last two weeks, prompting global investors to take another look at suddenly-tempting Japanese equities.
However, this burst of overseas buying sparked a round of yen buying, feeding into the traditional March flight of Japanese capital back into yen.
The closure of Japanese financial markets for Monday's equinox holiday curbed that flow of funds into yen, allowing the dollar a much-needed break from last week's downturn.
Euro traders, meantime, found little reason to bank on the European currency in the wake of data showing that European prices fell 2.7 percent in January, steepening their 2.6 percent December decline.
By 3:00 p.m. ET, the euro was flat, climbing minimally to $1.0913 from its most recent New York close of $1.091.
With Germany, Europe's biggest economy, hovering near recessionary conditions, many currency traders now fear that slack growth will force the European Central Bank to lower interest rates in the near future, depressing the euro against other global currencies. 
-- by staff writer Robert Scott Martin
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