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Can Use Treasuries in No Mood for
Risk Before Fed
Reuters
Monday, January 26, 2004; 9:21
AM By Wayne Cole NEW YORK (Reuters) - Treasuries struggled to hold
even minor gains on Monday with much of the market still in shock after Friday's
savage sell-off and in no mood to take risks before this week's Federal Reserve
policy meeting.
The week is also packed with data including the first reading of U.S. fourth
quarter gross domestic product which could well show the economy grew at an impressive
4 to 5 percent pace. Fresh supply is coming to market, with a two-year
note auction set for Thursday. "The market's discounted strong GDP but
anything above 5.0 (percent) will still hurt," said a trader at a U.S. primary
dealer. "The auction could be interesting because everyone's hyper about
foreign central banks and whether they'll keep buying (Treasuries)," he added.
Treasuries tumbled on Friday after a bounce in the dollar sparked worries
that Asian central banks would not need to intervene quite so aggressively, and
thus have less dollars to buy Treasury debt with. Still, with the dollar
slipping against the yen again, hopes were reviving in the bond market for more
intervention from the Bank of Japan, easily the single largest foreign purchaser
of Treasuries in the last year. The European Central Bank also helped bond
market sentiment by playing down speculation it might cut interest rates. Talk
of a possible cut had triggered the dollar's rally on Friday. That was
just enough to keep the market from falling further and the 10-year note was holding
at 4.08 percent early on Monday. It had touched a four-month trough of 3.92 percent
on Friday before the selling took hold. Continue
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