Prices of U.S. Treasury securities ended yesterday's session mixed, with the 30-year bond trading about 1/8 point lower and other maturities finishing a few ticks higher in what analysts described as a lackluster session largely unfazed by turmoil in the former Soviet Union. "It's been one of the more quiet Mondays the market has seen in a while," one trader said. "There were not many large players around."
Following a weekend of riots and violence in Moscow, Treasury prices started yesterday's trading somewhat firmer. Also helping prices yesterday morning was a Commerce Department report showing that construction spending fell 1.1% in August.
The violence in Moscow, where foes and allies of Russian President Boris Yeltsin battled over the parliament building, caused some flight-to-quality buying of Treasury securities. The reduction in construction spending helped the market because it suggested that the economy will continue at its tepid pace.
But by midday, much of the spunk provided by both the situation in Moscow and the construction report dissipated.
First, the situation in Moscow began to improve as Yeltsin's opponents announced they would surrender. At the same time, the market began to refocus on Friday's payroll report as an indicator of the market's health.
As a result, bond prices began to drift downward in light trading, with other maturities trading somewhat higher. The 30-year Treasury bond finished the afternoon to yield 5.99%, well within a trading range of 5.95% to 6.05% that many analysts say will be the norm until the market can digest some more economic-sensitive information.
Some of this information will appear on Friday when the government releases its nonfarm payrolls report. Several economists said they expect payrolls to increase as much as 175,000, and in turn, move the yield on the 30-year Treasury bond to the upper reaches of its current trading range.
The situation in Moscow "was never really a concern," said Marilyn Schaja, a money market economist for Donaldson, Lufkin & Jenrette Securities Corp. "The market is really waiting for the employment numbers."
Yesterday's trading marked the second straight lackluster session in the Treasury market. On Oct. 14 and 15, the government will release its monthly reports on the producer price index and the consumer price index, two potentially market-moving indicators of inflation.
In late afternoon trading, the 6 1/4% 30-year bond was down 5/32 to yield 5.99%. The 5 3/4% 10-year note was up 3/52 to yield 5.32%. And the 5 1/2% seven-year note was up 3/32 to yield 4.88%.
The 3 7/8s% two-year note was up 1/32 to yield 3.80%, and the 4 3/8% three-year note was up 1/32 to yield 4.10%.
Rates on the Treasury's three-month bill were up one basis point to 2.93%. The six-month bill was one basis point higher at 3.04%, and the rate on the year bill was unchanged at 3.22%.
In the futures market, the price of the December Treasury bond contract was unchanged at 119 13/32.