WASHINGTON -- A stronger-than-expected home sales report pushed Treasury security prices lower yesterday, with the short end giving up more than the long end -- which has been the market's habit lately.
The long bond was quoted down 7/32 late yesterday at a price of 95 3/32 with a yield of 7.93%. The 10-year note moved in tandem, losing six ticks at 100 7/32 with a 7.84% yield.
Meanwhile, the short end took it on the chin: Yields on three-month bills rose 10 basis points to 5.93% and returns on six-month bills climbed 14 basis points to 6.57%.
Sales of new single-family homes rose 1.3% in October to an annualized rate of 726,000 units, the Commerce Department reported. This was the fourth gain in as many months and the highest level this year.
"The report showed the [Federal Reserve] has more to do," said Marilyn Schaja, money market economist at Donaldson, Lufkin & Jenrette Securities Corp.
A strengthening dollar and falling commodity prices kept the long end of the curve from falling further yesterday, analysts said. There is also a general impression among market participants that the Fed is ahead of the inflation curve, and is likely to hike short-term rates again, analysts said.
"People generally think the Fed is doing its job," Schaja said. However, this implies the short end will creep lower in anticipation of another rate increase, she added.
Treasury Market Yields Previous Previous Monday Week Month3-Month Bill 5.94 5.51 5.356-Month Bill 6.56 6.08 5.881-Year Bill 7.09 6.68 6.362-Year Note 7.57 7.33 7.043-Year Note 7.67 7.56 7.315-Year Note 7.76 7.75 7.727-Year Note 7.79 7.78 7.8710-Year Note 7.81 7.86 8.0230-Year Bond 7.91 7.97 8.16
Source: Cantor, Fitzgerald/Telerate
Stock Market: The Dow Jones Industrial Average fell 3.70 points yesterday, to close at 3741.92.
Foreign Exchange: In late New York trading yesterday, the dollar was quoted at 100.34 Japanese yen and 1.5715 German marks.
Commodities: The Commodity Research Bureau's index closed down 0.68 point yesterday, at 227.03.