Treasuries Finish Lower

Early-session gains were erased in tight, range-bound trading

Treasuries finished lower in price Friday, erasing early gains.

Early firmness in the long end of the yield curve was underscored by a technical, short- covering bid. But rumors of a "think tank" call for only 50 basis-point increase in rates for the year, in addition to a Vermont Nuclear plant fire, unnerved shorts, sparking a grinding front end bid. But as that bid stalled, the long end was sold, helped by the rebound in stocks and talk of asset reallocations. By mid-morning, prices erased all the session's gains and hedge-fund selling turned prices negative into noon. The afternoon trade was spent in a tight range as traders adjusted postions.

Friday's report on the current account deficit was largely ignored. The deficit widened to $144.9 billion in the first quarter, a record, from a revised $127.0 in the 2003 fourth quarter.

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