NEW YORK (CNNfn) - U.S. Treasurys tumbled Monday as the dollar plunged to its lowest levels in nearly three months against the Japanese yen and drained the appeal of U.S. securities.
At around 3 p.m. ET, the Treasury's benchmark 30-year issue was down 23/32 in price at 101-20/32 as the yield, which moves in the opposite direction, rose to 5.14 percent.
Despite the first day of trading of the euro currency, it was the Japanese yen that stole the limelight in money market circles Monday and dragged on bond prices.
"We're seeing problems in dollar-yen, but I don't have a good explanation why the dollar is getting hit so hard," Kevin Flanagan, a bond market expert at Morgan Stanley Dean Witter, said.
Other analysts said the dollar was coming under pressure from climbing interest rates in Japan's bond market, which boost the appeal of yen-denominated issues.
The dollar was down 1.24 yen at 112.06, after dropping as low as 111.57, which is the lowest the greenback has been against the yen since last Oct. 8.
The euro, the new pan-European currency used by 11 nations, fetched $1.1826 Monday afternoon.
Bonds also came under pressure early in the day after Wall Street stocks shot upward from the outset and bourses in Paris and Frankfurt exploded up more than 5 percent.
That chipped away at the appeal of fixed-income securities like bonds, as investors look to tap the higher returns of stocks.
The drag from a weaker dollar siphoned off any possible benefit from a morning report that showed continued weakness in the American manufacturing sector.
The National Association of Purchasing Management said manufacturing activity in December fell to its lowest level since May of 1997, due largely to weakness in Asia's key markets.
The NAPM index reading of 45.1 indicates continued contraction in U.S. manufacturing. 
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