WASHINGTON -- Treasury securities gained across the board Friday as a wave of important economic reports convinced traders that the Federal Reserve would not tighten again until mid-November, market analysts said.
The yield curve flattened slightly as price gains on the short end outpaced the long end. The yield on three-month bills fell to 4.99% from 5.05% the previous day, and the six-month yield dropped to 5.48% from 5.53%.
Meanwhile, the benchmark 30-year bond gained 7/32 to a price of 96 4/32, pushing the yield down slightly to 7.83%. And the 10-year note increased 9/32 to 97 1/32 to yield 7.60%.
Following a very favorable producer price report, the Labor Department Friday said consumer prices grew an expected 0.2% in September. This was mildly bullish for the market, said James Hale, senior fixed-income strategist with MMS International.
Also Friday, the Commerce Department reported that retail sales grew 0.6% in September, also anticipated by analysts. And the Fed said industrial production was unchanged in September. The operating rate of manufacturers, mines. and utilities actually dipped.
All told, the CPI and production reports more than offset what was probably a slightly bearish retail sales report, Hale said.
The market is growing ever more confident that the Fed won't raise short-term rates until its next formal policy meeting, on Nov. 15 at the earliest. Hale said. But the longer-term outlook remains bearish, he added. Treasury Market Yields Previous Previous Friday Week Month 3-Month Bill 4.96 5.01 4.696-Month Bill 5.46 5.54 5.211-Year Bill 6.00 5.98 5.772-Year Note 6.54 6.63 6.363-Year Note 6.84 6.93 6.665-Year Note 7.23 7.33 7.097-Year Note 7.41 7.51 7.3010-Year Note 7.59 7.68 7.4730-Year Bond 7.82 7.90 7.75 Source: Cantor, Fitzgerald / Telerate
Stock Market: The Dow Jones Industrial Average rose 20.52 points Friday to close at 3910.47.
Foreign Exchange: In late New York trading Friday, the dollar was quoted at 98.15 Japanese yen and 1.5172 German marks.
Commodities: The Commodity Research Bureau's index closed up 0.72 point Friday at 228.26.