NEW YORK (CNNfn) - Treasury bond prices rose more than a point Thursday, the first gain in four sessions, on growing sentiment the Federal Reserve won't raise interest rates next week.
Just before 3:30 p.m. ET, the price of the benchmark 30-year bond rose 1-1/32. Its yield, which moves inversely to the price, fell to 6.05 percent from 6.12 percent Wednesday
"There seems to be a strong consensus that the Fed isn't going to do anything," said Bruce Alston, who manages $1.5 billion in bonds for Value Line Asset Management.
While Alston isn't convinced the Fed will stand pat on Oct. 5, he points to a growing attitude among analysts that "inflation isn't a problem."
Many of the day's economic reports supported that belief. The government said Thursday the economy grew at a slower-than-expected rate in the second quarter. Weekly claims for unemployment, meanwhile, stayed below the key 300,000 level for the 10th straight week, a figure consistent with strong job growth that has continued without inflation. Finally, the Chicago Purchasing Managers index, a survey of manufacturing in a key industrial region, fell to 53.8 in September from 56.1.
In the day's only strong number, new home sales jumped in August to the second-best level ever.
Still, more closely watched figures like employment data, consumer prices and producer prices have all come in weaker than expected recently.
"I think now … people believe that Greenspan is not going to move in October," said Gregg Hymowitz, money manager at Entrust Capital. "Now, so the debate has shifted to whether he takes a tightening bias or no tightening bias."
The central bank has raised rates twice since June in a bid to pre-empt inflation and cool an overheating economy.
A pullback in gold and commodity prices Thursday also helped bonds. Oil, gas, gold and platinum prices all fell, easing fears of rising inflation sparked by a recent run-up in those prices.
The day's rise in bonds came despite a strengthening stock market, which often draws investors out of fixed-income securities.
Dollar weak, but off lows
Bonds also found support as the dollar failed to hold its weakest levels of the day against the yen.
While the U.S. currency dropped the against the yen Thursday for the first time this week, the dollar came back off its lows following news of a leak at a uranium-processing plant 70 miles from Tokyo sent radiation levels soaring.
The accident, said Tony Crescenzi, chief bond strategist at Millar Tabak, hurt the yen and helped Treasury bonds, which are seen as a safe heaven in times of uncertainty.
Just before 3:30 p.m., ET, the dollar slipped to 106.29 yen from 107.04 Wednesday, a 0.70 percent drop in the dollar's value.
The dollar's weakness Thursday marked an abrupt, if expected, turnaround. The U.S. currency has been climbing against the yen since Japan last weekend indicated it will weaken its currency to protect the country's fragile economy.
For three days the pledge halted the climb of the yen, which had gained about 15 percent against the dollar since June.
But analysts were convinced the yen would eventually return to its strengthening course as investors, betting on Japan's recovery, flood the country with money.
That appeared to be happening Thursday as Tokyo's benchmark stock index, the Nikkei 225, rose 323.18 points, or 1.87 percent, to 17,605.46.
Against the euro, the dollar fell to its lowest level in nearly four weeks Thursday on signs of investor optimism over economic recovery in Europe.
"We have been waiting for European recovery, and it's been slow in coming," said Patricia Chadwick, head of U.S. equities at Invesco. "I think it is coming, and I think that the merger and acquisition activity in Europe is going to drive corporate profits higher. So I think there are some real opportunities in Europe."
Just before 3:30 p.m. ET, it cost $1.0680 to buy one euro, up from $1.0645 Wednesday, a 0.33 percent drop in the dollar's value.
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