July 20, 2008
Treasurys move lower after upbeat Citi report, ahead of next week's auctions
NEW YORK (AP) _ Treasury prices declined for a third straight session Friday after Citigroup Inc.'s second-quarter report eased investor concern about credit market turmoil.
Investors, relieved that there was hope for financial stocks, again pulled money out of the relative safety of government debt. Treasurys have been steadily rising in the past few weeks as many on Wall Street feared that banks and brokerages would suffer massive write-downs and losses. However, that did not materialize.
Citigroup's loss was lower than what many analysts had expected, and its stock soared. Wells Fargo & Co., JPMorgan Chase & Co. and other financial institutions also reported better-than-expected results.
"We've been much less reactive during the session, and a big part of that is stocks are holding such a narrow band," said Joel Marver, a Treasury technical analyst at Thomson Financial. "Treasurys had been up ahead of the week, and reality came back in during the past three days."
The 10-year Treasury note fell 25/32 to 98 9/32. Its yield rose to 4.09 percent from 4.00 percent on Thursday, according to BGCantor Market Data. Yields move in the opposite direction as prices.
The 30-year long bond — typically the most sensitive to inflation worries — fell 22/32 to 95 18/32. Its yield rose to 4.65 percent from 4.61 percent on Thursday.
The 2-year note fell 9/32 to 100 13/32, and yielded 2.65 percent, up from 2.50 percent.
Marver also said many fixed-income investors were positioning their portfolios ahead of a number of auctions scheduled for next week. He said Treasurys "will get hit again as prices go down as the enhanced supply hits everyone."
The government plans to auction 3-month and 6-month bills totaling about $47 billion on Monday. That will be followed by auctions for $6 billion of Treasury Inflation-Protected Securities and $28 billion of 4-week bills on Tuesday; $32 billion of 2-year notes on Wednesday; and $20 billion of 5-year notes on Thursday.
In addition, there will also be plenty of economic and earnings reports on the calendar. Wall Street will digest data on home sales, consumer sentiment and durable goods orders, and the release of the Federal Reserve Beige Book. Earnings reports are due out from American Express Co., Bank of America Corp., and Wachovia Corp.
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