Treasuries mixed as curve flattens, auction looms
Thu Feb 24, 2005 11:21 AM ET
(Adds help wanted data, reaction, updates prices)
By Wayne Cole
NEW YORK, Feb 24 (Reuters) - Treasuries were mostly firmer on Thursday as investors renewed bets on longer-term debt while shunning shorter-dated paper ahead of a $24 billion two-year note auction later in the session.
Gains were restrained, however, by a batch of generally upbeat U.S. economic data, which were taken as reinforcing the case for further rate hikes from the Federal Reserve.
Figures on durable goods pointed to still healthy business investment, while low jobless claims and a rise in the help wanted index encouraged those looking for a meaningful improvement in the February payrolls report.
The net result was a modest 4/32 rise in the 10-year Treasury note (US10YT=RR: Quote, Profile, Research) , lowering yields to 4.25 percent from 4.27 percent. The 30-year bond (US30YT=RR: Quote, Profile, Research) added 13/32, taking yields to 4.63 percent from 4.66 percent.
"The durables data were actually pretty good and could even see analysts nudge up their GDP forecasts for this quarter," said one trader at a U.S. primary dealer.
"But the market's too busy reestablishing curve flatteners to care much. With CPI out the way it seems safe to bet on the long-end for a while," he added. There was much relief on Wednesday when the U.S. consumer price index failed to match the alarming gain seen in producer prices.
The yield curve flattened a little more, with the spread between two- and 10-year yields shrinking two basis points to 80 basis points.
With investors favoring long-term debt, the five-year note (US5YT=RR: Quote, Profile, Research) was left to hover at 3.87 percent. Yields on two-year notes (US2YT=RR: Quote, Profile, Research) ticked up to 3.45 percent as prices cheapened into the auction, which closes at 1:00 p.m. (1800 GMT).
Traders were anxious after last month's sale drew only tepid demand from outside the dealer community, though this month's auctions of three- and five- year paper fared better.
January's sale drew bids for a modest 2.01 times the amount on offer and indirect bidders, a class that includes foreign central banks, took only 29 percent of the notes, well below the 41 percent average.
Earlier this week the market was unsettled by reports the Korean central bank was planning to diversify its, mainly dollar, portfolio thought the bank later played down the talk.
Overseas central banks hold around $1.07 trillion of Treasuries, or more than a quarter of the entire market, so investors are sensitive to any hint of slackening demand.
STRONG UNDERNEATH
Orders for overall durable goods looked soft on the surface with a 0.9 percent dip in January, but proxies for business investment were much stronger. Nondefense capital goods orders rose a healthy 2.9 percent, while shipments rose 3.7 percent.
"Any fears of a hangover in early 2005 after the expiration of the depreciation tax bonus at the end of last year can now be officially put to bed," said Stephen Stanley, chief economist at RBS Greenwich Capital.
"In fact, I will probably be marking up my forecast for the investment component of GDP based on these numbers," he said.
Initial jobless claims rose to 312,000 from 303,000 the week before, but that was still a relatively low number.
There were also signs of a pick up in hiring intentions with the Conference Board's help wanted index rising to its highest level since February 2003.
"With jobless claims dropping sharply too, there is now clear evidence that the labor market has shifted up a gear over the past couple of months," said Ian Shepherdson, chief U.S. economist at High Frequency Economics.
He was hopeful the figures pointed to a gain of over 200,000 for February payrolls.
"Markets ignore help wanted but it has been reliable in recent years; this is big news," he added.
.....la volta che mi metto short io sto strunz sale.....
:smile:
che dipenda dal fatto che in Germania c'è più concorrenza, ossia più broker ? La prima volta che chiamo chiedo delucidazioni in merito - Andrea, contratta, te lo dice il tuo manager di fiducia 
