Natick Condominiums

Prices of U.S. Treasury securities slumped on Wednesday while yields, which always move in the opposite direction, jumped again. The rise in Treasury yields, however, sparked little immediate response in key mortgage products, which instead nosed slightly downward as products adjusted after Tuesday's slippage in Treasury yields.

The Treasury bond and note market focused again on supplies, as the Treasury Dept. conducted the second leg of its quarterly refunding by selling $13 billion in five-year notes. Traders said although the amount of bids received per dollar-amount of notes offered was solid, that was more than offset by signs the auction, on the heels of Tuesday's lukewarm reception for the three-year note, again attracted only tepid indirect demand, including from foreign central banks.

Concern that foreign banks might curb their appetites for U.S. Treasury securities helped send Treasury prices sharply lower as traders fretted about demand for 10-year notes at Thursday's final leg of this quarter's refunding action.

Wednesday's sole economic data, September wholesale inventories, elicited little response despite a 0.6-percent rise that was roughly double many forecasts.

The bond market also barely wavered as Senators during a hearing grilled big oil company executives over the post-Hurricane Katrina energy price runup that resulted in record-high prices at the pump while oil companies reaped record-high quarterly profits. By day's end, however, crude oil had lost more than $0.75 and stayed below $59 a barrel after losing ground mainly on news that U.S. crude oil supplies expectedly rose during the latest week.

Stock Pare Gains Late, End Firmer

Late during Wednesday's trading session, the stock market pared gains as it digested news that explosions hit three hotels in Amman, Jordan. Police there said the explosions, which early reports said killed at least 53 people and injured 120 others, appeared to be the work of suicide bombers and had earmarks of Al Qaeda.

Movers on Wednesday including General Motors Corp., which fell to its lowest intraday price in more than four years after Fitch cut GM's debt rating again, shoving it even further into junk-status territory. GM shares lost $1.23 or 4.76 percent to $24.63.

Traders also began to wager whether the stock market, specifically the Standard & Poor's 500, will mount another rally during November and December after bouncing up sharply in four of the last five years during the final two months.

At 4:00 p.m. EST:

The Dow 30 Industrial Index rose 6.49 points (+0.06 percent) to 10,546.21; the Nasdaq Composite index firmed 3.74 points (0.17 percent) to 2,175.81, and the Standard & Poor's 500 Index added 2.06 points (+0.17 percent) to end at 1,220.65.

The 30-year Treasury bond slumped 1-8/32 in price with the yield jumping to 4.84 percent from 4.76 percent on Tuesday.

The 10-year Treasury note fell 21/32 in price with the yield advancing to 4.64 percent from 4.56 percent on Tuesday.

The 5-year Treasury note lost 12/32 in price with the yield rising to 4.56 percent from 4.47 percent on Tuesday.

At 4:00 p.m. EST, AVERAGE mortgage rates (zero discount points) based on rates collected nationwide were:

The 30-year Conventional Fixed-Rate Mortgage was at 6.105 percent versus 6.125 percent on Tuesday.

The 15-year Conventional Fixed-Rate Mortgage was at 5.643 percent against 5.671 percent on Tuesday.

Coming Up:

Thursday delivers the week's busiest economic data schedule before Friday's government and bond market Veterans Day holiday. October's export prices excluding agriculture are expected to rise 1.1 percent, while import prices excluding oil are seen gaining 1.2 percent.

The September U.S. trade balance is seen showing a wider deficit of $61.3 billion versus $59.0 billion in August. Initial weekly jobless claims are forecast at 320,000, off 3,000 from the previous week. Also, the preliminary November University of Michigan consumer sentiment index is expected to firm to 76.0 from a prior reading of 74.2. And, finally, the October U.S. Treasury budget deficit is forecast narrowing to $50.0 billion from $57.3 billion.

In light of the renewed rise in Treasury yields on Wednesday, lenders might see room to adjust rates upward overnight on key mortgage products.

Laura Jacobs

ljacobs@interest.com

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