OH MY GOSH!!! ARE YOU F'ING KIDDING ME!!!

Source: Reuters
RPT-TREASURIES-Debt prices trim losses after housing data
Mon May 18, 2009 2:04pm EDT
* Builder sentiment in line with estimates

* Sharp rally in stocks cuts safe-haven bid for Treasuries!

* May NAHB index reads 16, as expected, up from April (Refiles to additional subscribers) (Updates prices, comment)

By Ellen Freilich!

NEW YORK, May 18 (Reuters) - U.S. Treasury debt prices trimmed sharp losses on Monday after an index showed an improved mood among U.S. home builders, right in line with expectations.

Any ray of hope that the housing slump might be coming to an end would tend to be negative for Treasuries prices. But prices were already down sharply on the day as a strong stock rally cut the safe-haven big for government debt and some traders may have hoped for a more robust reading on home builders' sentiment than the small improvement actually recorded.

The National Association of Home Builders/Wells Fargo Housing Market Index showed U.S. homebuilder sentiment rose to 16 in May from 14 in April.

The big jump in equities prices was partly driven by stronger results from home improvement retailer Lowe's (LOW.N: Quote, Profile, Research, Stock Buzz), which fueled hopes the economic slump was easing and spending was stabilizing. Those gains, reflecting a revived appetite for risk, kept bonds in negative territory.

"The market definitely has been on a downtrend from (strength in) equities and corporate deal flows. The NAHB data came in pretty much within expectations," said Ralph Manigat, senior bond strategist with 4Cast Ltd. in New York.

Benchmark 10-year notes were down 16/32, their yields rising to 3.19 percent, up seven basis points on the day. They were down 19/32 before the NAHB report.

The 30-year bond was down more than a full point, its yield rising to 4.15 percent from 4.08 percent late on Friday.

The Dow Jones industrial average was 2.03 percent higher at 8,436.30.

"It's really just a reallocation trade," said Calvin Sullivan, trader at Morgan Keegan.

Earlier, the Fed bought Treasuries maturing in August 2019 and February 2023.

Bond yields have been creeping steadily higher for two months on evidence that the pace of economic decline was slowing. But doubts about a second-half recovery have helped the market recover some ground. Benchmark 10-year rates have fallen about 0.25 percentage point in just over a week. (Editing by Leslie Adler)