Treasuries Edge Higher Tuesday As Stocks Slide, Tuesday, July 24, 2007 4:37:06 PM

Treasuries gained ground on Tuesday, with the yield on the 10-year benchmark note falling 2 basis points. A weak performance on Wall Street and lingering concerns about the subprime mortgage market pushed money into fixed income. With the 10-year yield holding steady below 5% for the third consecutive session, the bond market appears to be settling into a range. Tomorrow, the market could see movement following the release of housing data scheduled for 10:00 AM Eastern Time.

Concerns about the immediate future of the U.S. economy and falling stock prices sparked the recent advance in bonds, with the Dow hitting a stumbling block after reaching record highs last week. Uncertainty on Wall Street has investors transferring money into fixed income, driving yields lower. Investors are hoping for clearer information on the state of the US economy when a few key reports are released later this week.

At Tuesday`s close the yield on the 10-year benchmark note was down 2.0 basis points to 4.944%.

Treasuries have seen uncertain trading since mid-June, when yields began to come off their multi-year highs. Trading has been increasingly choppy, and Friday yields closed below 5% for the first time since early June. Wall Street took a hit on Tuesday due to disappointing earnings results from some major companies, continued problems in the housing market, and investors` anxiety over a bullish streak amidst a slowing economy.

Investors will be paying close attention to several reports scheduled for release beginning tomorrow. Data on existing home sales is the first report of the week which is expected to prick up investors ears. Thus far, the general consensus on the report is not expecting the housing market to see any respite from its worst slump in nearly two decades. Rather, home sales for June are widely anticipated to come in as the worst month for existing home sales in four years. The housing sector has cast a dark shadow over an otherwise strong economy, due in large part to problems with subprime mortgages. Problems in the housing markets were cited as a chief area of concern for the economy by Federal Reserve Chair Ben Bernanke.

Two other reports, on durable good orders and gross domestic product, are expected to be more uplifting than data on existing home sales. The reports should give investors an idea of where the economy stands. Durable goods orders, released Thursday, measure orders for items meant to last more than 3 years, giving a glimpse at the health of manufacturing. The report on GDP statistics, scheduled for Friday, is seen as a good indicator of overall economic performance.

In May, durable good orders fell 2.8 percent in following three consecutive increases. However, in June analysts expect to see a 2.0 percent increase for new orders. With regards to GDP, many economists expect an improvement from the meager 0.7 percent growth seen in the first quarter, thanks to more exports and increased inventory investment.

Copyright © 2007 RTTNews.com. All Rights Reserved.