NEW YORK (AP) - Treasury prices rebounded Monday, with investors returning
to the safety of government securities after stocks gave up an early rally due
to weakness in the technology sector.
Earlier in the day, the stock market had rallied and Treasurys sold off
after economic indicators pointed to slow growth later in the year --
alleviating some investors' worries about a deep, protracted recession. The
Conference Board said its index of leading economic indicators rose by 0.1
percent in April, following a similar rise in March and several consecutive
months of declines prior to that.
But later in the day, stocks gave up most of their gains as chip maker
SanDisk Corp. warned of soft sales and as oil prices continued to climb.
David Ader, bond strategist at RBS Greenwich Capital in Greenwich, Conn.,
noted that Treasury trading volume Monday was roughly 64 percent of that on an
average day, suggesting that bond market participants were finding little new
information to jump on.
"It's really stocks, nothing else but stocks," said Ader. "That's the driver
in here. With the subdued flows, it's hard to make a compelling story except for
that."
The benchmark 10-year Treasury note rose 6/32 to 100 13/32 and yielded 3.83
percent, down from 3.85 percent late Friday, according to BGCantor Market Data.
Bond prices move in the opposite direction of yields.
The 2-year note rose 3/32 to 99 15/32, and its yield fell to 2.40 percent
from 2.45 percent.
The 30-year long bond recovered from its lows of the day, trading flat at 96
30/32 and yielding 4.56 percent, down from 4.58 percent late Friday.
In late trading, the 10-year yield was still at 3.83 percent, the 2-year
yield inched further down to 2.39 percent, and the 30-year yield remained at
4.56 percent.
The 3-month Treasury bill's yield was at 1.88 percent, up from 1.83 percent
late Friday, and its discount rate was at 1.84 percent, up from 1.80 percent
late Friday.
Treasurys have been bouncing within a range over the past several weeks as
investors try to figure out the direction of the economy and inflation -- and,
consequently, how the Federal Reserve will alter interest rates going forward.
"Maybe the Fed's on hold, maybe it isn't, but we need more concrete
information to make a decision," Ader said.
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