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My Portfolio • Community • VSE • Alerts Front Page News & Commentary Markets Mutual Funds & ETFs Personal Finance Technology Tools & Research My MarketWatch Community Video   Markets   Global Markets   Emerging Markets   Earnings Watch latest news BOND REPORT Treasurys gain on gloomy U.S.
data Readings on home prices, consumer confidence remain negative By Deborah Levine, MarketWatch Last update: 11:54 a.m.
EDT June 24, 2008 NEW YORK (MarketWatch) -- Treasury prices advanced Tuesday, pushing yields down for a third day, after a pair of economic reports showing no respite for the retreat in U.S.
home prices as well as a bigger-than-anticipated drop in consumer confidence.
Bond traders also awaited Wednesday's decision on U.S.
interest rates from the Federal Open Market Committee.
Ten-year note yields (UST10Y: UST10Y News, chart, profile, more Last: Delayed quote data Add to portfolioAnalyst Create alert InsiderDiscussFinancials Sponsored by: , , ) fell 2 basis points to 4.14%.
A basis point is one one-hundredth of a percentage point.
Standard & Poor's Case-Shiller index tracking changes in house prices in 20 metropolitan areas fell 15.3% in the year through April, wiping out four years of price appreciation and worse than the 14.4% decline seen for the 12 months running through March.
See full story.
Separately, the Conference Board's consumer confidence index showed a decline to 50.4 in June, down from 58.1 in the previous month.
Economists surveyed by MarketWatch had expected the index to decline, but just to 56.
"The data confirm growth is very anemic at best, if not recession-like," said Mark MacQueen, co-founder of Sage Advisory Services, which oversees $6.5 billion in assets.
"As long as the economy is weak, the Federal Reserve is going to be hesitant to raise rates" -- a positive for Treasurys.
Fed officials have highlighted concerns about price increases and inflation expectations in recent speeches on the economy, which markets have interpreted as signaling intent to increase borrowing costs in the near future.
Analysts widely expect the FOMC to keep the target for overnight loans between banks at 2% when their two-day meeting winds up Wednesday.
'Setting up for a relief bid' Meanwhile, futures traders pared back on their bets that the Fed will raise rates in coming months.
The FOMC has meetings scheduled for Aug.
5, Sept.
16, Oct.
28-29, and Dec.
16, according to the Fed's Web site.
The August futures contract shows a 38% chance of a quarter-point hike that month.
Futures also indicate a 61% chance that the target rate will rise to 2.75% by November.
"Our general bias [is] for the FOMC to produce a statement which is less hawkish than the market is currently pricing," RBS Greenwich Capital strategists wrote in a research note.
"We see the market setting up for a relief bid." Treasurys rose earlier due to rumors of an attack on Iran, which have since been denied, analysts said.
Government debt stayed higher despite the Treasury Department's auction of $30 billion in two-year notes, with bids are due at 1 p.m.
Eastern time.
The amount matches the last two monthly sales as the most for the maturity since at least 1997.
Selling more debt at once tends to push up the yield to attract enough bidders.
Two-year yields (UST2YR: UST2YR News, chart, profile, more Last: Delayed quote data Add to portfolioAnalyst Create alert InsiderDiscussFinancials Sponsored by: , , ) , which move inversely to price, fell 3 basis points to 2.91%.
Deborah Levine is a MarketWatch reporter, based in New York.
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