Bond Market Update
August 8, 2008
| Bond | Previous | Current | Change | % Change |
| 3 Month Bill | 1.67 | 1.69 | 0.02 | 1.20 |
| 6 Month Bill | 1.92 | 1.94 | 0.02 | 1.04 |
| 2 Year Note | 2.42 | 2.50 | 0.08 | 3.31 |
| 5 Year Note | 3.15 | 3.19 | 0.04 | 1.27 |
| 10 Year Note | 3.92 | 3.93 | 0.01 | 0.26 |
| 30 Year Bond | 4.55 | 4.53 | -0.02 | -0.44 |
| *Prices as of 8/8/2008 4:46 PM |
Source: S&P Comstock |
Bond Market Updates and Reports at SmartMoney.com
August 08, 2008 3:52 PM
By Deborah Levine
Treasury prices declined Friday after a government report showed U.S. productivity remained relatively high in the second quarter, muting inflation pressure.
Rising U.S. stocks and falling oil prices also buoyed investor optimism, diminishing the need for the relative safety of government debt.
Ten-year note yields fell 1 basis point, or 0.01%, to 3.94%. Bond prices move inversely to yields.
The Labor Department reported productivity in the nonfarm business sector rose at an annual rate of 2.2% in the second quarter, slower than the 2.7% growth that had been expected by economists surveyed by MarketWatch. .
Unit labor costs, a key gauge of inflationary pressures, rose 1.3%, less than the 1.6% expected by economists. Costs had increased 2.5% in the first quarter.
"The moderation in unit labor costs is a welcome sign, as it suggests that high food and energy prices are not bleeding through into a more generalized inflation," T.J. Marta, fixed-income strategist at RBC Capital Markets, wrote in an e-mail.
Gains in the U.S. dollar pushed down the price of crude-oil futures to the lowest since early May, sending equity markets higher.
Losses may be contained as Fannie Mae, the biggest U.S. buyer of home mortgages, reported a wider-than-expected loss for the second quarter.
Treasurys have barely budged this week. The yield on two-year notes yield 2.50% from 2.52% a week ago.
Futures traders have pared bets on the Federal Reserve increasing interest rates after, at their meeting on Tuesday, policymakers gave no indication of increasing inflation concern to spur them to raise borrowing costs.
Traders see a 32% chance that the central bank will raise rates a quarter of a percentage point in October. That chance is down from 64% on Aug. 1.
The probability that policymakers will hike rates as soon as their next meeting in September has fallen to 17% from 43% last week.
The gap between two- and 10-year note yields has widened this week, another sign investors have lowered expectations for a rate hike. Benchmark 10-year notes yield 1.47 percentage points more than two-year debt, up from 1.43 points a week ago.
(END) Dow Jones Newswires
08-08-08 1552ET
Copyright (c) 2008 Dow Jones & Company, Inc.
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