The treasury marked posted gains Monday, snapping a two day losing streak. The bond market weakened in initial trading, slipping to a new multi-month intraday low. The yield on the benchmark 10-year note jumped at market open and spent the remainder of the session drifting back down from that early high. Tuesday, the industrial production index for September will be released. Analysts expect production to slow to 0.1 percent from Augusts' 0.2 percent. The index measures the physical output of the nation's factories, mines and utilities. This sector accounts for less than 20 percent of the economy, but most of its cyclical variation. Within the industrial production index is the capacity utilization rate. Analysts expect a slight decreace in utilization, down to 82.1 percent from Augusts' 82.2 percent. Investors pay close attention to the capacity utilization rate, which provides an estimate of how much factory capacity is in use. Knowing how much is being utilized is an important part of the Federal Reserve's decision on interest rates, as they look to se if production constraints could threaten to cause inflationary pressure. For Monday, the yield on the benchmark 10-year note closed down 1.4 basis points to 4.673 percent. Bond investors are likely looking ahead to the week's economic data, including a highly-anticipated speech by Fed chair Ben Bernanke on Friday. The data along with the speech should offer clues as to whether or not the Federal Reserve will hold interest rates steady in its policy meeting. The bond market sank to a multi-month closing low Friday as investors continue to gain confidence in the economy.
October 15, 2007 3:31 PM