WASHINGTON -- Surprising surges in September housing starts and the Philadelphia Federal Reserve Bank's business outlook survey for October pummeled Treasury security prices yesterday. A weakening dollar didn't help.
The 30-year bond lost more than a point with the price falling to 94 10/32 late in the day, pushing the yield up to 8.00% from 7.89% on Wednesday. This is only the second time since May 1992 that the yield on the long bond has hit 8.00%. The 10-year note lost more than 3/4 of a point to hit a price of 96 %2, putting its yield at 7.80%.
Meanwhile, yields on three-month bibs rose to 5.13% from 5.02%, and yields on six-month bills climbed to 5.68% from 5.57%, in late trading yesterday.
Optimism left over from last week's favorable inflation reports worked against the market yesterday as players who were sitting long were forced to reassess their positions, said Doug Butmick, a market analyst with Technical Data. "A lot of people are looking for a rebound now so they can sell," he said. The market once again strongly believes the Fed will raise short-term interest rates by another 50 basis points at or before its next scheduled policy meeting on Nov. 15, some analysts said.
The 4.4% surge in housing starts in September, reported by the Commerce Department, was particularly disturbing because the housing inarket "was supposed to be the savior" for bonds, Burtnick said.
The Philadelphia Fed reported that its October prices paid index surged to 53.6 in October from 40.4 in September, and the overall activity index rose as well.
Dean PattersonTreasury Market Yields Previous Previous Thursday Week Month 3-Month Bill 5.11 5.02 4.896-Month Bill 5.65 5.52 5.381-Year Bill 6.16 5.96 5.862-Year Note 6.74 6.61 6.453-Year Note 7.04 6.90 6.765-Year Note 7.44 7.29 7.177-Year Note 7.62 7.45 7.3510-Year Note 7.77 7.63 7.5330-Year Bond 7.99 7.84 7.77 source: Cantor, Fitzgerald/Telerate
Stock Market: The Dow Jones lndustrial Average fell 14.47 points yesterday to close at 3921.57:
Foreign Exchange: In late New York trading yesterday, the dollar was quoted at 97.00 Japanese yen and 1.4915 German marks.
Commodities: The Commodity Research Bureau's index closed up 2.74 points yesterday at 233.91.