Treasuries Finish Higher
Treasuries rallied for their fourth straight day Wednesday, garnering impetus from geopolitical concerns and weaker stocks. Another anthrax scare in Washington got the ball rolling overnight. Bonds extended higher on news that North Korea dismissed U.S. aid proposals as "deceptive drama." Data provided some price volatility, but had no lasting impact.
A stronger-than-expected eight point surge in the New York Fed's Empire manufacturing survey to 20.72 knocked prices lower, but followthrough was lacking and the market recovered quickly on a weaker than expected -0.3% print on core PPI.
Pricings of the $3 billion KfW five-year and the $5 billion Freddie 10-year took pressure off the belly. Meanwhile, stocks caved in following Intel's poor outlook for 2003 capital expenditures reported in after-hours Tuesday. The better than 1% slide in the major indexes generated increased demand for Treasuries, though with the two-year note looking pretty rich below the 1.70% mark, investors moved down the curve to the bond.
The Fed's release of the Beige Book for the upcoming January 28-29 FOMC had little impact as it reiterated that economic activity remained sluggish through December. The dollar continued to suffer from the weaker stocks and rising geopolitical tensions.
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