Treasury note and bond prices ended basically unchanged yesterday in extremely light holiday trading.
In overseas action, the 30-year bond ended down 2/32, to yield 6.20%.
The cash market was closed in observance of Veterans Day. A general lack of liquidity or fresh news provided investors with little incentive to trade in the Treasury market, London-based traders said.
Most trades came at the hands of speculative accounts that bought and sold securities in an attempt to create some volatility in the market.
"It was a boring day, and there were no significant flows to speak of," said one head U.S. government securities trader in London. "With a holiday in the States and nothing to trade off of, we spent the day looking at charts."
Activity in the futures market was just as quiet. The December bond contract slipped lower at the opening and hovered at lower levels throughout the session.
The only economic report of consequence released yesterday was the Mortgage Bankers Association's weekly application index, which fell to 351.2 from 362.8 in the week ended Nov. 5. The association's purchase index fell to 172.3 from 176.2, and its refinancing index slid to 1282.5 from 1349.1.
The solid performance of the new purchase index in recent weeks supported recent evidence of a pickup in the housing sector, analysts said. But they noted that the release merely confirmed the findings of other reports, and did not say anything new about the economy.
The retail sales report is today's key focus. Forecasts for solid sales figures have already prompted some accounts to liquidate long positions.
Economists polled by The Bond Buyer generally expect a 1.0% pin in retail sales for October, a reading that they say would signal a continuation of better consumer spending activity.
Marilyn Schaja, a money market economist at Donaldson, Lufkin & Jenrette Securities Corp., forecasts that retail sales for October will jump 0.9% due to a spike in automobile sales. Excluding autos, Schaja predicts that retail sales rose by 0.4%, reflecting increasing sales of building materials and other durable goods.
Putting retail sales in perspective, Schaja said they increased by 3. 1 % so far this year compared to 5.0% during the same period last year. She said she believes retail sales will continue to increase during the current quarter, as the secondary effects of the increase in housing materialize, including purchases of furniture and appliance.
"A healthy rise in retail sales will fit with other signs of improvement in the economy," Schaja said. "I think the report will show that the low level of interest rates are helping some sectors of the economy."
In futures, the December contract ended down 19/32 to 115.25.
In the cash markets, the 3 7/8% two-year note was quoted late yesterday unchanged at 99.15-99.16 to yield 4.14%, the 4 3/4% five-year note ended down 2/32 at 98.16-98.18 to yield 5.08%, the 5 3/4% 10-year note was down 2/32 at 100.09-100.12 to yield 5.69%, and the 6 1/4% 30-year bond was down 2/32 at 100.15-100.19 to yield 6.20%.
The three-month Treasury bill was up one basis point at 3.12%, the six-month bill was up one basis point at 3.27%, and the year bill was up two basis points at 3.40%.