Treasuries trim losses, security trumps jobs data
Fri Oct 7, 2005 11:04 AM ET
(Adds security threats, comments; updates prices)
NEW YORK, Oct 7 (Reuters) - U.S. Treasury debt prices trimmed losses on Friday as security concerns reported at major Northeastern rail hubs offset a bond-friendly report showing fewer-than-expected job losses due to last month's hurricanes.
Authorities shut down part of New York's Pennsylvania Station because of what authorities said was a police situation, a day after officials warned of a possible attack on the system, a spokeswoman for the Amtrak rail system said. Police wearing hazardous material suit were seen walking about the cordoned-off area.
"It's the 'T' word. It's the 'T' word again," said one bond trader at a Wall Street primary dealer, referring to the threat of attacks, which bring investors looking for a safe haven into the bond market.
Two-year notes (US2YT=RR: Quote, Profile, Research) erased losses and turned steady to yield 4.21 percent.
Benchmark 10-year notes (US10YT=RR: Quote, Profile, Research) trimmed nearly all their earlier losses, to trade just 1/32 lower for a yield of 4.40 percent, from 4.39 percent on Thursday.
Earlier the bond market was in a selling mode after September non-farm payrolls fell much less than expected, suggesting the two hurricanes that struck the Gulf Coast are more a threat to inflation than to growth.
Five-year notes (US5YT=RR: Quote, Profile, Research) were down just 2/32 for a yield of 4.26 percent, versus 4.25 percent on Thursday. The 30-year bond (US30YT=RR: Quote, Profile, Research) also came back to trade just 3/32 and was yielding 4.62 percent, compared with 4.62 percent on Thursday.
The September report, reflecting less fallout from Hurricanes Katrina and Rita than the market had been expecting, showed a result of 35,000 job losses, far fewer than the 143,000 job losses economists expectated.
The government also revised the number of jobs the economy created in August to 211,000 from 169,000 and, in July, to 277,000 from 242,000.
"The data is strong enough to give the Fed a clean slate in focusing largely on inflation repercussions of the hurricane and higher commodity prices, rather than the growth implications," said Alan Ruskin, research director at 4CAST Ltd. in New York.
"The numbers are then solidly bond negative, with risks that if 4.44 percent on 10s go, then next levels at 4.51-4.525 percent will quickly be targeted," Ruskin added.
In recent days, Federal Reserve officials have signaled growing concern over inflation, in part because of rising energy prices, suggesting they are intent on tightening monetary policy further.
According to a separate -- and unconfirmed -- report, a major rail station in Philadelphia was also evacuated on Friday.
© Reuters 2005. All Rights Reserved.
