Strong news on the U.S. economy and slightly higher commodity prices pushed Treasury prices marginally lower yesterday.
The 30-year bond ended down 5/32, to yield 6.24%.
A general lack of interest in the market, coupled with further signs that the economy will end the year on firm footing, allowed prices to grind lower.
Market participants said that with the outlook for the economy still up in the air, most large accounts have long left the market. Those remaining active players in Treasuries are hanging in there for the purposes of risk management and are not placing new bets on Treasuries.
"Nobody wants to get involved in the market until we start getting numbers about the fourth quarter next year," said Tony Crescenzi, head of fixed income trading at Miller, Tabak, Hirsch & Co. "The jury is still out about growth next year, and people want to wait and see if the fourth quarter numbers tell us anything about the economy's performance in 1994."
Fourth-quarter numbers continued to trickle in yesterday. The Commerce Department reported leading indicators gained 0.5% during November, in line with most expectations.
The National Association of Realtors reported that existing home sale were up 2.9% during November to 4.21 million unit rate, stronger tha expected.
Market participants said both re ports were consistent with widespread forecasts for growth of 4% or more in the fourth quarter of 1993 "The numbers didn't tell us anything new about the economy we didn't already know," Crescenzi said.
Higher commodity prices place further pressure on the market yester day. Upward pressure on precious metals prices nudged the Commodity Research Bureau's index of commodities futures prices up 1.18 to 226.56.
Players agree that the Treasury market seemed to develop an immunity to bad news in recent weeks, as prices held steady or fell only marginally despite a number of strong reports on the economy. Treasuries have performed relatively well even though the statistics supported the notion that the interest rate-sensitive sectors of the economy continue to benefit from the low level of rates.
As 1993 draws to a close, the market is waiting to see if the vigor seen in the fourth quarter of 1993 carries over into next year, said Kevin Flanapn, money market economist at dean Witter Reynolds Inc. Until the market gets a better read on that, Flanagan said prices are likely to remain confined to recent ranges.
In futures, the March bond contract ended down 12/32 to 115.23.
In the cash markets, the 4 1/4% two-year note was quoted late yesterday down 1/32 at 100.03-100.04 to yield 4.18%. The 5 1/8% five-year note ended down 4/32 at 100.01-100.03 to yield 5.10%. The 5 3/4% 10-year note was down 4/32 at 100.10-100.14 to yield 5.68%, and the 6 1/4% 30-year bond was down 5/32 at 99.31-100.03 to yield 6.24%.
The three-month Treasury bill was down seven basis points at 3.00%. The six-month bill was down one basis point at 3.21%, and the year bill was up one basis point at 3.45%.Treasury Market Yields Prev. Prev. Wednesday Week Month 3-Month Bill 3.04 3.10 3.086-Month Bill 3.28 3.27 3.311-Year Bill 3.56 3.55 3.592-Year Note 4.18 4.18 4.183-Year Note 4.45 4.44 4.525-Year Note 5.10 5.09 5.167-Year Note 5.22 5.24 5.3210-Year Note 5.68 5.70 5.7930-Year Bond 6.24 6.21 6.28Source: Cantor, Fitzgerald/Tolerate
