Bonds Bust Out for Biggest Day in Six Months As Mild Inflation Data Calm Rate Anxieties
NEW YORK -- Benign inflation data and soothing comments by Federal Reserve officials sparked the biggest one-day rally in the bond market in over six months, as investors regained their confidence that inflation will remain quiescent and the Fed will hold off on an interest-rate increase, at least for the next month.</br></br>In late trading, the benchmark 30-year bond was up 1 24/32, or $17.50 for a bond with $1,000 face value, at 102 12/32. The yield, which moves in the opposite direction from the price, fell back through the 6% barrier that was crossed during Monday's rout, to trade at 5.944%.</br></br>Two-year notes rose 8/32 to yield 5.558%, more than making up for Monday's loss of 6/32.</br></br>"The economic numbers caught people leaning the wrong way," said Barbara Kenworthy, who manages almost $9 billion in fixed-income assets at Prudential Investments. "They take pressure off the Fed for a rate increase in May and a lot of the pressure off for a July move, though they'll have to see more data."</br></br>The market's rally came on heavy trading, underscoring the marked shift in sentiment on the part of investors who earlier this week were counting down to an increase in interest rates. In all, $111.1 billion of Treasurys were traded, according to GovPx Inc., the second-busiest day of the year.