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Bonds Higher, Dollar Drifts |
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Traders take wait-and-see attitude ahead of manufacturing and construction reports, FOMC meeting.
May 2, 2005: 9:43 AM EDT
NEW YORK (CNN/Money) - Bonds edged higher Monday and the dollar recovered losses against the yen as traders looked ahead to manufacturing and construction reports as well as the upcoming Federal Reserve meeting.
The benchmark 10-year note edged up 1/32 of a point to 98-13/32 to yield 4.19 percent, down
from 4.20 late Friday, while the 30-year bond also rose, up 3/32 of a point to 113-3/32 to yield
4.51 percent, down from 4.52 late Friday. Bond prices and yields move in opposite directions.
The five-year note rose one tick to yield 3.89 percent, while the two-year was little changed,
yielding 3.65 percent.
Treasury prices made modest gains ahead of reports on manufacturing and construction,
which analysts predicted would show a mild dip in productivity and indicate that inflation isn't
out of hand.
Bond traders fear inflation because it erodes the value of the fixed-income investment.
The Institute for Supply Management is will release its April manufacturing index at 10 a.m.
ET, with an average forecast for 55, down from 55.2 in March.
HSBC cited high energy prices as one reason for the softening trend, Reuters reported
Monday.
A report on March construction spending will also be released in the morning, with economists
forecasting a rise of 0.3 percent, compared with 0.4 percent in February.
As long as neither report shows a surprise sharp gain, Treasurys should continue to trade
higher ahead of the Federal Reserve's policy-setting Federal Open Market Committee
meeting.
Analysts have said mounting evidence that the economy has hit a slow patch, due in part to
sky-high oil prices, will ensure that the central bank raises interest rates the quarter-point
already priced into the market.
In currency markets, the dollar was little changed against the euro and yen.
The euro bought $1.2867, unchanged from late Friday, while the dollar bought ¥104.85, up
from ¥104.72 the previous session.
Analysts said the yen weakened following reports that North Korea may have test-fired a short-
range missile into the Sea of Japan, and as speculation waned that China would revalue the
yuan. Find this article at:
http://money.cnn.com/2005/05/02/markets/bondcenter/bonds/index.htm |
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© 2002-2008 Opportunities In Options - All Rights Reserved |
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Although this information is believed to be correct and from reliable sources, no guarantees are being made to its accuracy. Past performance is not indicative of future results. All trading involves a risk of loss.
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