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US Treasuries drift up after uneventful Greenspan
(Updates with Greenspan speech)
By Ros Krasny
CHICAGO, April 8 (Reuters) - U.S. Treasury debt prices turned mixed on Friday with longer maturities higher in subdued trading after a speech by Federal Reserve Chairman Alan Greenspan proved uneventful.
Greenspan steered clear of monetary policy in remarks on consumer finance, saying that expanded credit availability had been a boon to the U.S. economy.
Bonds have had little fundamental input all week, leaving some dealers sidelined to avoid choppy, directionless trading.
Early pressure on Friday came from overnight comments by St. Louis Fed President William Poole that the central bank will act with vigor to keep inflation under control.
The 10-year note <US10YT=RR> rose 2/32 in price for a yield of 4.48 percent, similar to late Thursday.
The benchmark note briefly traded above 4.52 percent before slipping, well short of resistance at 4.56 percent. The next target is likely to be 4.47 percent.
Five-year Treasury notes <US5YT=RR> were down 1/32 at a yield of 4.13 percent, unchanged. Two-year notes <US2YT=RR> were at 3.74 percent, up from 3.73 percent.
The 30-year bond <US30YT=RR>, slapped lower on Thursday by comments from Philadelphia Fed President Anthony Santomero, rose 12/32 for a yield of 4.77 percent, down from 4.80 percent.
Deferred Eurodollar futures, which outperformed Treasuries on the rally earlier this week, fell heavily in early trading.
Dec Eurodollars <EDZ5> show an implied end-of-year Federal funds rate just below 4.0 percent, consistent with a "measured" pace of Federal Reserve interest rate increases.
"While the inflation radar is still on, the Fed Chairman should feel reassured about the current policy stance, which seems aimed toward a gradual increase in interest rates," said Adolfo Laurenti, associate economist at LaSalle Bank.
If anything, dealers are wary about minutes from the March meeting of the policy-setting Federal Open Market Committee, due for release on Tuesday, and any further reference to rising inflation or increased pricing power.
Futures fully price a 25 basis point Fed hike in May but assess only a 13 percent chance of a 50 basis point increase.
Crude oil prices <CLc1> fell sharply early Friday, extending a sell-off from record highs into a fifth day to promise relief to consumers who have struggled with high costs at the gasoline pump.
"Persistently high energy prices will eventually have a bigger effect on the behavior of consumers, although this has not been the case so far," Laurenti said.
Chicago Board of Trade Treasury futures recovered from a half-hearted push toward key support levels.
"Many at the CBOT are already distracted enough by the Cubbies, Masters and the Pope's funeral (not necessarily in that order) and the light volumes have been favored by fast-money accounts in the meantime," said strategists at Action Economics. ((Reporting by Ros Krasny, editing by James Dalgleish; Reuters Messaging:
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-----MARKET SNAPSHOT AT 1:47 p.m. (1747 GMT) -----------
Jun Eurodollar <EDM5> 96.51 (-0.01)
Jun T-Bond <USM5> 111-13/32 (+02/32)
Jun 10-year note <TYM5> 109-14/32 (-02/32)
Change vs Current
Nyk yield
Three-month bills<US3MT=RR> 2.73 (+0.02) 2.781
Six-month bills <US6MT=RR> 3.03 (-0.01) 3.119
Two-year note <US2YT=RR> 100-01/32 (-01/32) 3.741
Five-year note <US5YT=RR> 99-12/32 (-01/32) 4.143
10-year note <US10YT=RR> 96-06/32 (+02/32) 4.483
30-year bond <US30YT=RR> 108-26/32 (+11/32) 4.778