LEGLESS RALLY: Can the Specialists Get Short Squeezed?
"SPEC POSITIONING continues to favour the 10 yr, according to the latest partial read from the COTR data for the US futures for the week ending 19 Oct. Net longs on 10 yr Treasuries increased by almost two thirds with new longs aided by short covering. However, this positive tone is less evident down the curve with net positioning on the 5 yr remaining unchanged, and a build up of new shorts offsetting new longs on the 2 yr. Nonetheless, in both these latter two, there still remains a substantial overhang on net longs. As for the equity side, the bearish tone intensified. Net shorts on both the S&P 500 and NASDAQ futures expanded again with positioning from the short side dominating."
Treasurys lose footing on oil, auction
U.S. sells $24 billion in 2-year notes; results deemed poor
By Kate Gibson, CBS MarketWatch.com
Last Update: 2:17 PM ET Oct. 27, 2004
E-mail it / Print / Discuss / Alert / Reprint / RSS
CHICAGO (CBS.MW) -- With investors setting aside mixed durable-goods data, Treasury prices rose and then fell along with the price of oil Wednesday, while a disappointing auction of 2-year notes also weighed on the market.
CBS MARKETWATCH TOP NEWS
U.S. stocks surge as crude slides below $53
Oil futures drop as much as 5% from record level
Beige Book: U.S. economy growing, despite energy tab
Mortgage rates seen slowly rising through 2005
Boeing's Q3 profit rises 78% on better revenue growth
Free! Sign up here to receive our Before the Bell e-Newsletter!
TRADING CENTER
Get up to $500 in commission-free trades
TRACK THESE TOPICS
My Portfolio Alerts
Index: CBOE 10-Year Treasury Yield Index Add
Create
Column: Bond Report
Create
Get Breaking News sent directly to your inbox
Create A Portfolio / Create An Alert
The $24 billion auction was marked by lackluster demand for new government paper.
At 1:40 p.m. Eastern, the benchmark 10-year Treasury note was off 16/32 at 101 15/32.
Its yield ($TNX: news, chart, profile), which is used in figuring consumer and corporate lending rates and which moves inversely to price, climbed to 4.07 percent.
Treasurys have rallied as demand has intensified in recent weeks, pushing yields back lows last seen in early April, as investors regarded rising energy prices as effectively putting a lid on U.S. economic growth.
"With oil prices rebounding and risk aversion still high, the path of least resistance for bond yields is south," said analysts at Action Economics.
Crude-oil futures fell as much as 4 percent on Wednesday, with a significant buildup in weekly U.S. crude inventories outweighing a drop in distillate supplies. After climbing to a record intraday high of $55.65 a barrel on the New York Mercantile Exchange, the December crude contract dropped back below the $54 mark. See Futures Movers. Earlier, Treasury prices held tight to overnight gains as the Commerce Department reported sales of new homes unexpectedly rose 3.5 percent in September to a seasonally adjusted annual rate of 1.206 million units.
Economists' forecasts had called for a decline to about 1.14 million units. See full story.
Before that, the Commerce Department reported orders for U.S.-made durable goods increased a lower-than-expected 0.2 percent in September, held back by a big drop in orders for transportation goods.
Excluding the 3.6 percent decline in transportation goods, orders for durable goods increased 1.7 percent. Total orders fell a revised 0.6 percent in August, down from the 0.3 percent decline previously reported. Read story. GDP fallout?
The durable-goods report "does not really change the landscape," yet may mean slightly less growth in the nation's gross domestic product for the third quarter, said Greenwich Capital Markets analyst Steve Stanley.
The Commerce Department will release its first estimate of GDP growth in the July-September quarter on Friday at 8:30 a.m. Eastern.
The consensus forecast of Wall Street economists is for third-quarter real GDP to rise at a 4.2 percent annual rate, after rising 3.3 percent in the second quarter. See Economic Preview.
Also Wednesday, the government's auction of $24 billion in 2-year notes drew lackluster results, with the notes awarded at 2.59 percent. The 1.93 cover ratio fell shy of expectations, while indirect bidder participation was also sub par, at 41.3 percent.
The weakened dollar had bolstered expectations that Japan might increase its purchases of the U.S. currency and park any such investments in U.S. debt assets. See the Currency Column.
Against this backdrop, the 30-year bond declined 28/32 at 108 3/32, with its yield rising to 4.83 percent.
The 5-year maturity fell 10/32 to 100 5/32, its yield up to 3.34 percent. And the 2-year note was off 3/32 at 99 27/32, its yield at 2.59 percent.
AI
Market Data 
Markets 
