EFFECTIVE 5:00 PM EASTERN TIME: 11/05/97 /_________________\
KEY INDICATOR CURRENT CHANGE FROM LAST YIELD |6-Mth CD :5.71% *|
--------------- --------- ---------------- ------ |11th COFI:4.941% |
3-month T-Bill: 5.10 - unchanged -5.24% |6Mo-LIBOR:5.805% |
10 Year T-Note: 101 17/32 - up 8/32 -5.931 |1Yr TBill:5.35% *|
Long Bond.....: 102 01/32 - up 12/32 -6.22% |3Yr TBill:5.73% *|
Dow Jones.....: 7692.57 - up 3.44 |5Yr TBill:5.78% *|
FHLMC 60 day..: 7.39% - from 7.39% (11/04) |10YrTBill:5.90% *|
FNMA 60 day...: 7.37% - up from 7.36% (11/04) |30YrTBond:6.22% *|
|PRIME - 8.500%|
Todays Interest Rate/Loan Fee Pricing Trend: |DISCOUNT - 5.000%|
*** STABLE *** |FED FUNDS- 5.50 |
================ |_________________|
* Wkly Average ending 10/31
10:30AM EST: Bonds are up slightly and Stocks are relatively flat in early trading following a quiet overnight session (Hong Kong's Heng Seng index was down 0.9%). Another indication of reduced flight-to-quality flows can be seen in the volume overnight, which was a dismal $1.7 billion. Investors paid little attention to a higher than expected report on September Factory Orders. There are no more major economic reports scheduled for release today.
The key today will be the second leg of the quarterly refunding with the $11 billion 10-Year Note auction (results at about 2:00pm et). Yesterday's 3-Year auction saw decent bidding, but as always, there is more concern about the 10s and the 30s. The market would love to see 6.00% on the new 10s, but will probably not get there. The final leg comes tomorrow with the sale of $10 billion of 30-Year Bonds.
The Commerce Department reported this morning that Factory Orders rose 0.4% in September - the market had forecast a 0.2% decline. Orders for nondurables rose 0.8% and orders for durables rose 0.1% (Commerce had previously reported that orders for durables fell 0.6%). The August increase was revised to 1.2% from 1.3%.
Bond prices ended moderately lower yesterday as a calm day in the stock market left bond investors to focus on the Treasury's sale of $14 billion of three-year notes. In late trading, the price of the benchmark 30-year Treasury bond was down 17/32, raising its yield to 6.24% from 6.21% late Monday.
Stocks traded quietly. And in the absence of any major U.S. economic reports to spur bond-price movements, more mundane matters took center stage.
As bonds rallied last week, yields fell significantly. Even after a sharp bond-market reversal Monday, Wall Street dealers worried that yields remained too low to attract investors. However, the auction results were in-line with expectations at an average yield of 5.762% -- within the 5.76%-5.77% expected range. The bid to cover ratio was 2.47, above the 2.39 average for the previous 12 3-Year Note auctions.
Meantime, there was less focus than usual on the Labor Department's October employment report, due out Friday. The monthly releases often becomes the center of debate days in advance, as they have the potential to roil the market.
One reason this one is spurring less anxiety, analysts said, is that many people believe Federal Reserve policy makers won't raise interest rates when they next meet, on Nov. 12....