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Bonds edge higher
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July 25, 2000: 3:13 p.m. ET
Treasurys manage slight gains despite strong economic data; dollar mixed
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended slightly higher Tuesday despite a report showing U.S. consumer confidence was at its highest level in nearly a year.
In the currency markets, the dollar was dragged lower against the euro but rose against the yen.
Shortly before 3 p.m. ET, the 10-year Treasury note, considered the market benchmark, rose 1/32 of a point in price to 103-12/32. The yield, which moves in the opposite direction to price, fell to 6.02 percent from 6.03 percent Monday.
The 30-year bond gained 4/32 to 106-7/32, its yield unchanged from its 5.81  percent level Monday.
Early in the day, Treasurys posted solid gains from a rally in German bonds, known as bunds. But the market gave back some of those gains following the release of stronger-than-expected economic data.
The Conference Board said its index of consumer confidence rose to 141.7 in July from a revised 139.2 in June. The number was above consensus estimates of 139.
In a separate report, existing home sales rose 2.8 percent to an annual rate of 5.23 million units in June, the highest level since last August, according to  the National Association of Realtors.
As investors await further evidence of a cooling in the economy, analysts said the reports fueled doubts about the slowdown.
"We gave back some ground because the data proved that the economic slowdown isn't necessarily a sure thing," said Richard Yamarone, senior economist at Argus Research Corp. "If consumer confidence remains at near all-time highs, the economy will continue to expand."
The Federal Reserve has raised short-term interest rates six times in the past 13 months. But with signs of a slowing, it left the fed funds rate, or the overnight bank lending rate, at 6.5 percent last month. Policy officials are scheduled to meet on Aug. 22.
Fed Chairman Alan Greenspan's appearance before the House Banking Committee had little market impact. Greenspan's testimony was identical to his address last week before the Senate Banking Committee. The question and answer period following the testimony offered little new insight on upcoming monetary policy.
With Greenspan out of the way, two key economic reports for the second-quarter are expected to determine the market's tone in the near-term -- Thursday's employment cost index (ECI) and Friday's gross domestic product.
Don Kowalchick, debt strategist at A.G. Edwards, said the ECI, a gauge of employment costs, will be critical due to the central bank's concerns about the tight U.S. labor market.
"The Fed doesn't want to see employment costs rising significantly," he said.
Charles Lieberman, chief economist at First Institutional Securities, agreed. He told CNNfn's Before Hours the market should be "comforted" if wage costs do not increase substantially. (101K WAV) (101K AIFF)
Economists polled by Briefing.com forecast ECI to show a 1 percent gain in the second-quarter compared with a 1.4 percent gain in the first-quarter.
Dollar mixed
The euro hit a two-week high against the dollar Tuesday as traders focused on the differences in interest rates between the euro zone and the United States. Analysts said expectations that the United States may not have to raise rates, while a rate boost from the European Central Bank is widely anticipated, weighed on the dollar.
Nevertheless, Alison Montgomery, currency economist at IDEAglobal.com, said the euro's gains may be limited due to continued flow of foreign investment from Europe to the United States. This was highlighted by Germany's Deutsche  Telekom's cash and stock offer for U.S.-based mobile phone operator VoiceStream Wireless Corp. Monday.
Meanwhile, the yen fell to a two-month low against the dollar amid continued concerns about Japan's economic outlook.
Shortly before 3 p.m. ET, the euro traded at 93.82 cents, up from 93.33 cents Monday, a 0.5 percent loss in the dollar's value. The dollar was at 109.20 yen, up from 108.79 yen Monday. 
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