Treasuries
Up as Growth Falls Short
Fri January 30, 2004 10:56
AM ET
(Page 1 of 2) By Pedro Nicolaci da Costa NEW YORK (Reuters)
- Treasury prices pushed higher on Friday after a report showing the U.S. economy
grew at a slower clip than analysts had forecast in the fourth quarter. In
a market wary of upside surprises from economic data, traders were relieved to
discover that U.S. gross domestic product expanded at a 4 percent rate in the
fourth quarter after the third quarter's blistering 8.2 percent pace. Wall
Street forecasts had pegged growth closer to 5 percent, with one investment bank
predicting 6 percent. "The bond market took the GDP number positively," said
Gary Thayer, chief economist at A.G. Edwards & Sons in St. Louis. "It had
expected stronger growth and some people may now be reminded that the Fed will
not be quick to raise rates." Bonds pulled back a bit after a report revealed
manufacturing output in the Chicago area grew more briskly than anticipated. The
National Association of Purchasing Management-Chicago business barometer rose
to 65.9 in January from 61.2 in December, its highest level since July 1994. Economists
had forecast the index at 62.0. A reading above 50 indicates expansion in the
sector. In a boon to Treasuries, the indicator's employment component slipped
to 48.3 from 49.6 in December, suggesting a still-sluggish labor market. The
benchmark 10-year note (US10YT=RR: Quote
, Profile
, Research
) was up 3/32 in price, taking its yield to 4.17 percent from 4.19 percent
late on Thursday. Just last week, yields had been down at three-month lows of
3.92 percent. The 30-year bond (US30YT=RR: Quote
, Profile
, Research
) was 3/32 higher, leaving yields at 4.99 percent from 5.00 percent. Five-year
notes (US5YT=RR: Quote
, Profile
, Research
) were last at 3.18 percent, versus 3.21 percent. Bonds largely shrugged
off a jump in January consumer sentiment reported by the University of Michigan.
The gauge of consumer confidence rose to a final reading of 103.8 in January
from December's final 92.6, market sources said. The final reading was largely
in line with forecasts. Continue with: | 
