Futures Markets: Treasury Bond Contracts End Near Five-Year Highs
Treasury bond futures prices neared five-year highs in heavy trading and crude-oil futures tumbled on prospects of a weakening economy and low inflation.</br></br>Expectations of further oil-price cuts and other factors have helped extend the 2 1/2-month-old credit market rally and spark broadening interest among investors. Increased buying by brokerage houses in bond futures yesterday reflected heightened public interest, analysts said.</br></br>Bond price gains eroded on cash markets after the futures market closed. "It makes you wonder if the market is overheated," one futures trader said.</br></br>Nevertheless, Treasury bond futures closed 1 7/32 higher at 79-29 for June delivery. "It's a market that's accelerating and it doesn't seem to need much new or good information to go higher," said James Florsheim, an analyst with Heinold Commodities Inc., Chicago. "There's euphoria" among traders holding contracts to take delivery of bonds, "and relative fear and depression from those who might want to sell," he said. Until the rally loses momentum, projecting its end is taking "potshots," he said.</br></br>Crude-oil futures fell 45 cents a barrel to $27.02 for July delivery amid eroding prices on the spot, or noncontract, market and talk that the Organization of Petroleum Exporting Countries' ability to support prices is weakening. Nonfinancial commodity futures generally reflected the deflationary oil-price environment yesterday, continuing to hover near 2 1/2-year lows, according to an index compiled by the Commodity Research Bureau.