A mixed August durable goods report combined with a week of unimpressive economic indicators helped push the long end of the Treasury market more than 3/8 point higher on Friday.
At the close, the 30-year Treasury bond was up 13/32, to yield 5.96%.
Activity was quiet throughout the session, with some moderate buying reported directly after the day's economic releases.
But the eve of the Yom Kippur observance added to the typical Friday malaise, and trading had all but dried-up after noon.
The Commerce Department reported on Friday that durable goods orders rose 2.0% during August. The new was even more positive for the market when combined with an upward revision in durable goods orders for July.
For July, goods orders were initially reported to have dropped 3.8%, but in Friday's report, the decline was revised to 2.8%.
Several economists said Treasury prices were also pushed higher by a decline in unfilled durable goods orders for the month.
During August, the Commerce Department reported that unfilled orders feel 0.6%, marking the sixth consecutive decline in a row. Unfilled orders have increased only five times in the last 30 months.
"What this signals is that the manufacturing sector of the economy is still up down," said Kevin Flanagan, a money market economist at Dean Witter Reynolds. "All and all, it just does not appear that the feared upward pressure on interest rates is around the corner."
Any pressure on the long end does not look to come into play until Friday, Oct. 8, at the earliest. That's when the employment report for September is released.
"Once again, it doesn't look like we'll get a major number until the next employment report," Flanagan said. "We'll start to get a look at some September numbers with the purchasing managers' report, but the jobs picture is still first and foremost."
With new inflation numbers two weeks away, Flanagan said the long end of the Treasury market has settled into a "comfortable 6.00% to 6.15," trading range.
As far as this week's numbers, consumer confidence for September is released tomorrow, and final gross domestic product for the second quarter is released on Wednesday. Leading indicators, the national purchasing managers' report, and factory orders all are released on Friday.
"Overall, these numbers don't look like they hold a lot positives for the market," said Marylin Schaja, economist at Donaldson, Lufkin & Jenrette Securities Corp. "We expect all the indicators to continue to move higher."
Schaja said Treasury prices may come under pressure this week. As individual indicators begin to improve, she said, future concerns about inflation will rise, even though there have been no indicators that suggest anything but moderate inflation.
Giving Treasury prices a firm underpinning on Friday was the report that General Motors Inc. was planning to lay off 50,000 workers by 1995 and another 50,000 in 1996. The move would trim the embattled automarker's workforce by one-third.
Although unconfirmed by the company, the report was enough to sustain the positive mood in the market.
In futures, the December contract ended up 9/32 to 118.12.
In the cash markets, the 3 7/8% two-year note was quoted late yesterday up 2/32 at 99.31-100 to yield 3.87%. The 4 3/4% five-year note ended up 9/32 at 99.28-99.31 to yield 4.75%. The 5 3/4% 10-year note was up 10/32 at 102.20-102.24 to yield 5.38%. And the 6 1/4% 30-year bond was up 13/32 at 103.27-103.31 to yield 5.96%.
The three-month Treasury bill was up one basis point at 2.93%, the six-month bill was down two basis points at 3.14%, and the year bill was also down two basis points at 3.24%. Treasury Market Yields Prev. Prev. Friday Week Month3-Month Bill 2.97 3.00 3.086-Month Bill 3.10 3.15 3.201-Year Bill 3.34 3.37 3.372-Year Note 3.87 3.85 3.873-Year Note 4.13 4.15 4.205-Year Note 4.75 4.73 4.837-Year Note 4.95 4.93 5.0810-Year Note 5.38 5.36 5.4830-Year Bond 5.96 6.03 6.12 Source: Cantor, Fitzgerald/Telerate