Treasury prices inched higher yesterday afternoon after the market completed this week's note auctions.
Traders said a poll showing Democratic presidential candidate Bill Clinton was losing his lead over President Bush also helped the market.
Late yesterday, the 30-year bond was up 1/8 point and yielded 7.60%, and short-term notes were unchanged to marginally higher.
Treasury prices barely moved yesterday morning as dealers waited to bid on the $10.75 billion of five-year notes.
The market began to improve when the auction results were released. Traders and analysts said the auction went all right, although not as well as Tuesday's two-year sale.
The five-year notes were sold at a 5.84% yield, which is where the issue was trading when the bids were entered. The notes will bear a 5 3/4% coupon.
"The two-year saw strong bidding," said Michael Strauss, chief economist at Yamaichi Securities. "The five-year did not see the same type of strong bidding."
"I would say it was a cautious auction," Strauss said.
Traders said there was less retail interest in the five-years and as a result, dealers ended up owning more of the securities.
Participants said most of yesterday's price improvement reflected the Cable News Network's report that its daily poll showed Bush had cut into Clinton's lead.
CNN released the poll results during a 4:30 broadcast.
Its daily poll of 805 "likely" voters showed Clinton getting 40% of the vote, with Bush close behind at 38%. That compares with Clinton's 42% share and Bush's 36% share in Tuesday's CNN poll.
Treasury Market Yields
Wednesday Week Month
3-Month Bill 2.98 2.96 2.72
6-Month Bill 3.25 3.23 2.90
1-Year Bill 3.43 3.42 3.04
2-Year Note 4.30 4.18 3.78
3-Year Note 4.75 4.73 4.25
5-Year Note 5.76 5.74 5.32
7-Year Note 6.29 6.29 5.88
10-Year Note 6.72 6.73 6.34
30-Year Bond 7.60 7.60 7.37
Source: Cantor, Fitzgerald/Telerate
Independent candidate Ross Perot drew a 16% share in yesterday's poll, down from 17% on Tuesday. The poll has a 4% margin of error.
Late yesterday, the price of the when-issued 5 3/4% five-year notes had risen enough to push the yield down to 5.81% from the 5.84% yield at the auction.
The auction overshadowed yesterday's economic news and none of the indicators had much impact on Treasury prices.
New orders for durable goods fell 0.4% in September when the market had been expecting no change. The durable goods report contained something for everyone, with signs of life in the private sector offset by yet another decline in backlogs.
September durables orders excluding defense rose 0.5%, and nondefense capital goods orders surged 4.1%. But unfilled orders were down 1.3%, the 13th monthly decline in a row, and reached a level not seen since December 1988.
The September personal income and spending date released later in the morning looked stronger than expected, but analysts said the September gains were boosted by Hurricane Andrew, which depressed the August results and resulted in extra farm subsidy payments to affected areas in September.
September income and spending both rose 0.7%, but Michael Niemira, a business economist at Mitsubishi Bank, calculated that if it were not for the hurricane, income would have risen only 0.1% and spending would have been up 0.2%.
Matthew Alexy, a money market economist at First Boston, said there was little new information in the numbers.
"Durable goods orders continue to portray a manufacturing sector that is struggling, particularly when you look at the backlogs," he said.
The market also ignored the government's announcement yesterday afternoon that it ran a record $290.2 billion budget deficit in the year ended Sept. 30.
That was $20 billion more than the gap in fiscal year 1991, but far better than the $344 billion deficit the administration estimated last summer.
The December bond futures contract closed 7/32 lower at 102 21/32.
In the cash market, the 7 1/4% 30-year bond was 3/32 higher, at 95 23/32-95 27/32, to yield 7.60%.
The 6 3/8% 10-year note rose 1/8, to 97 13/32-97 17/32, to yield 6.72%.
The three-year 4 5/8% note was unchanged, at 99 19/32-99 21/32, to yield 4.77%.
In when-issued trading, the 4 1/4% two-year note was 1/32 higher, at 99 29/32-99 30/32, to yield 4.28%.
Rates on Treasury bills were lower, with the three-month bill down three basis points at 2.94%, the six-month bill off two basis points at 3.18%, and the year bill three basis points lower at 3.32%.