Vacationing traders unable to signal their displeasure with Friday's employment numbers weighed in yesterday morning, but the modest losses that resulted were mostly reversed by the end of the day.
The long bond, which had dropped about 1/4 point by the start of the New York session, finished a quiet trading day off just 1/16, to yield 8.49%.
"I'm surprised there wasn't a little more activity following Friday's data, since it was virtually released in a vacuum," said Jan Hurley, a senior market analyst at Chase Securities Inc., referring to the fact that most market participants took Friday off and were enjoying long July 4 weekends when June employment numbers were released.
The employment report showed June nonfarm payrolls fell 50,000, but that decline was offset by a big upward revision to May's payrolls number, which now stands at 119,000, double the 59,000 increase reported last month.
Also worrisome for the inflation-conscious bond market was a reported jump in wages for June. Average hourly earnings rose 0.6% gains in the $10.38, following 0.4% gains in the two previous months.
The market fell almost a full point on the news Friday, and several analysts predicted traders returning from vacation yesterday would bring it down further.
Instead, the market suffered only a slight drop, as participants focused on events slated for later this week. Tomorrow's seven-year note auction, for example, should be a good indicator of their appetite for supply. One note trader said he expects a coupon of about 8 1/4%.
In when-issued trading, the seven-year notes were trading at a price to yield 8.21%.
The most significant indicators of the week will not come until Friday, when the producer price index and retail sales figures for June will be announced.
The only number released yesterday, consumer installment credit for May, improved market sentiment, but failed to hold much sway over Treasury prices. Total credit fell $626 million for the month, largely because of sharply lower borrowing for automobiles, according to the Federal Reserve Board. Automobile credit dropped $3.3 billion but was partially offset by an increase in revolving credit of $1.4 billion, and by increases in other categories.
Treasury Market Yields
Monday Week Month
3-Month Bill 5.73 5.73 5.71
6-Month Bill 5.89 5.95 6.00
1-Year Bill 6.31 6.35 6.36
2-Year Note 6.94 6.96 6.95
3-Year Note 7.37 7.33 7.39
4-Year Note 7.57 7.50 7.56
5-Year Note 7.97 7.92 7.94
7-Year Note 8.20 8.13 8.16
10-Year Note 8.31 8.24 8.27
20-Year Bond 8.48 8.43 8.47
30-Year Bond 8.49 8.43 8.47
Source: Cantor, Fitzgerald/Telerate
The numbers were lower than the market had expected, but were generally ignored because they are now virtually two months old.
The September bond future contract closed 1/16 higher at 92 27/32.
In the cash market, the 30-year 8 1/8% bond was 1/16 lower, at 95 28/32-96, to yield 8.49%.
The 8% 10-year note rose 1/16, to 97 24/32-97 28/32, to yield 8.31%.
The three-year 7% note was up 3/32, at 98 31/32-99 1/32, to yield 7.37%.
Bill prices got an early boost from sharp declines in overseas equities markets and an initial drop in the Dow Jones industrial average. But the Dow reversed itself and ended the day up 29.52 points to 2961.99. Rates on Treasury bills ended the day mixed, with the three-month bill unchanged at 5.58%, the six-month bill five basis points lower at 5.66%, and the year bill down seven basis points at 5.95%.
Govpx Announces New Service
The Public Securities Association announced yesterday that Govpx Inc., a government securities pricing information service, has added a "best offer" feature to its screens.
The announcement marked the first enhancement of the system since it was introduced last month. Govpx Chairman Kenneth deRegt said in a statement that a number of other potential additional enhancements were under consideration to respond to market demand.
The company provides real-time prices and quotes on all U.S. Treasury bills, notes, and bonds. The data are a composite of activity from all 40 primary dealers, according to the company.