NEW YORK (CNNfn) - U.S. Treasurys were flat to slightly higher Friday despite an early rebound in the punch-drunk stock markets, boosted by recent signs of a slowing U.S. economy and continuing uncertainty about the U.S. presidential race.|
In early dealings, two-year Treasury notes rose 2/32 to 100-3/32 while the yield, which moves inversely to the price, fell to 5.57 percent. Five-year notes gained 2/32 to 101-14/32, yielding 5.41 percent.
Benchmark 10-year notes rose 1/32 to 102-4/32, yielding 5.46 percent. Thirty-year bonds fell 3/32 to 109-4/32, yielding 5.61 percent.
All eyes were on a report on the manufacturing sector of the economy due later in the morning, which could add weight to the widespread belief that the U.S. economy still is slowing sharply from its frenetic pace in the first half of the year.
Treasury yields have fallen sharply in recent sessions as crumbling stocks and mounting evidence of an economic slowdown -- from higher jobless claims to lower car sales -- have raised hopes that the Federal Reserve will move sooner rather than later to cut interest rates.
In early trading, the Dow was up about 0.2 percent, and the Nasdaq was up nearly 2 percent.
The U.S. manufacturing sector is expected to have shrunk for the fourth straight month in November as an inventory buildup earlier in the year led to a sharp drop-off in production, economists said. The National Association of Purchasing Management (NAPM) will release its report at 10:00 a.m. ET.
"The NAPM number will matter, but I don't think it will be as weak as some expect and that could take some of the steam out of the market," said Roberts.
Dollar plunges against euro
Banks are downgrading the dollar and pumping up their euro forecasts as investors' love affair with the U.S. economy shows signs of coming to a jarring end.
In early trading, the euro was at 87.38 cents, slightly off the day's highs of 87.9 cents; and the dollar was at 111.72 yen, slightly off the day's highs of 112.03 yen.
Concern about slowing U.S. growth and persistent declines in U.S. stocks have in recent days prompted currency analysts to slash forecasts of where the dollar is headed against the euro.
To be sure, the downgrading of the dollar was not universal.
Ian Gunner, foreign exchange strategist at ABN Amro in London, said the Dutch bank forecasts that the euro will be at 85 cents by the end of March 2001 and at 86.5 cents by the end of the second quarter of 2001.
"We are sticking to these forecasts so far, but there are significant downside risks on the dollar over the next few months," he said.
Others, like Nick Parsons, currency strategist at Commerzbank in London, said they saw no need to change forecasts that already had been looking for a sharp rebound in the euro.
"Our forecasts were amazingly high, and now they are realistically high," he said of his year-end 2001 target of $1.04. "The tech wreck will kill the dollar, and it looks like it has definitely peaked."
Compiled by Mark Gongloff from staff and wire reports