WASHINGTON -- A surprisingly strong report on manufacturing in October, showing a sharp gain in input prices, depressed Treasury security prices across the board yesterday.
The benchmark 30-year bond drifted lower in early trading, then began a steady, day-long decline after the National Association of Purchasing Management said its purchasing managers' index surged 1.5 points to 59.7% -- far exceeding analysts' expectations.
Late yesterday, the long bond was quoted down 31/32 at a price of 93 20/32 pushing the yield up to 8.06%. The 10-year note lost 20/32 for a price of 95 17/32 and a yield of 7.91%.
On the short end, yields on three-month bills grew two basis points to 5.21%, and yields on six-month bills climbed four basis points to 5.76%.
Adding to the market's distress, the Commerce Department reported that construction spending advanced 1.6% in September, also well above predictions.
A trader in Chicago speculated that yesterday's drubbing was exacerbated by too much cash sitting long when the worse-than-expected news hit trading floors.
He predicted further price declines, with more pain dished out to those sitting long than those sitting short. Treasury Market Yields Previous Previous Tuesday Week Month 3-Month Bill 5,20 5.15 5.076-Month Bill 5.74 5.71 5.591-Year Bill 6.21 6.21 6.012-Year Note 6.90 6.79 6.653-Year Note 7.14 7.10 6.965-Year Note 7.57 7.50 7.367-Year Note 7.73 7.69 7.5110-Year Note 7.89 7.84 7.6730-Year Bond 8.05 8.04 7.88 Source: Cantor, Fitzgerald/Telerate
Stock Market: The Dow Jones Industrial Average felt 44.75 points yesterday to close at 3863.37.
Foreign Exchange: In late New York trading yesterday, the dollar was quoted at 96.61 Japanese yen and 1.4945 German marks.
Commodities: The Commodity Research Bureau's index closed up 0.23 point yesterday at 233.53.