12:30PM EDT: The National Association of Purchasing Managers Index, originally scheduled for release tomorrow was accidentally released today. The report showed an increase overall to 54.2% in August from 53.4% in July. The prices paid component increased to 59.8% from 54.7%. The report has sent the market downward with the 30-Year Treasury Bond recently off 15/32, raising its yield to 6.09%. The 10-Year Note was off 13/32, raising its yield to 6.01%. 10:30AM EDT: Treasuries are up somewhat this morning despite further weakening of the dollar. Stocks are moderately higher as well. The focus of the news this morning is the Chicago Purchasing Managers Index which declined to 56.1% in August versus 60.5% in July. Forecasts were for an August reading of 60.0%. A reading over 50% indicates expansion. The number is not the booster for the market that it might have been, however. The price index, an inflation indicator, rose to 63.8% from July's 59.8%. In other news, the Conference Board's Index of Consumer Confidence fell back slightly to 135.8 in August versus 136.2 in July. July's number was revised from 135.6. The report shows that consumer confidence is high but not continuing to trend higher. This month's number actually exceeded expectations for a 134.2 reading. And the weekly report on retail sales as measured by the Mitsubishi report showed a decline of 0.5% last week. But the economic news is not the reason for improved Treasuries prices this morning. Most of the buying is being attributed to month-end index-related activity. Analysts note that the upside will be capped by hedgers who will be selling short to protect upcoming corporate deals. And the market is experiencing a technical bounce as bargain hunters are being attracted to prices that have fallen steeply in the last three trading sessions. The market rallied for two days last week when it believed that the Fed had completed its tightening for the year. But that belief was challenged and as the market faced this week of numerous important economic indicators, it resumed its bearish march downward. This morning, some traders are coming back on the opinion that the market may have reacted too sharply to the renewed negative sentiment. This has occurred even as the dollar has continued to fall against the yen. The dollar fell against the yen overnight to 109.07 as an official of the Japanese government remarked that Japan would not intervene at the 110 dollar/yen level. Most analysts do not think an intervention would do much good anyway as investors are betting that the economic recovery in Japan will provide a profit opportunity. Ironically, the consequent soaring of the yen threatens to choke off that recovery. The Nikkei stock index fell in its steepest drop in over a month last night. The drop was led by major exporting company stocks. And the rise in the yen, that is, the relative fall in the dollar, is expected to weigh on U.S. stocks today. The negatives that were facing the markets yesterday are still generally in place so analysts expect another day of low volumes and cautious trading. Monday, 8/30/99: Treasuries plunged Monday as corporate supply and Fed tightening fears reappeared. The sharply rising bond yields signaled a threat to stocks as well, sending the major indexes down sharply. In late trading, the 30-Year Treasury Bond was off 1-5/32, raising its yield to 6.06, its highest reading since August 16th. The 10-Year Note was off 23/32, raising its yield to 5.95%; and the Dow was down 176.04 points to 10,914.13. The market opened in a cautious mood after two steep drops on Thursday and Friday and the potential for more stumbles over the economic releases scheduled for this week. The morning's news that New Home Sales rose to its second highest reading, when expectations were for a decline, added fuel to the recent speculation that the Fed may not be finished increasing interest rates this year. Additional pressure came from expectations of a heavy corporate supply coming to market in September. Estimates range from $30 billion to as high as $60 billion in new corporate debt in September. Corporations will be rushing to bring their deals out before the fourth quarter when the Y2K situation threatens to dampen investor enthusiasm. Some of today's trading activity is being attributed to corporate underwriters selling Treasuries short to guard against interest rate risks to their upcoming deals. The market also is suffering under a weakening dollar relative to the yen. Late in the currency trading session the dollar was down to 110.65 from Friday's closing level of 111.35. The reduced value of the dollar also affects dollar-denominated investments like Treasuries. Moreover, a weakened dollar will require a higher number of them to purchase Japanese imports. And domestic prices may also rise as the competing import prices increase. Additional negatives for the market were rising oil prices and deteriorating technical factors in the bond futures market. And analysts note that light trading volume exaggerated the movement in bond prices. The threat of higher interest rates also weighed on stocks. The Dow was down 1.59% in late trading. The S&P 500 was off 1.80% and the Nasdaq was 1.67% lower. Again, low volume is cited as contributing to the movement here. Yesterday marked the second lightest session of the year for the New York Stock Exchange .... | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||