NEW YORK (CNNfn) - Treasury bond prices fell Tuesday after the release of stronger-than-expected economic data, which may just give the Federal Reserve one more reason to raise interest rates ahead, analysts said.
Just before 3:00 p.m. ET, the price of the benchmark 30-year Treasury bond fell 4/32 to 95-10/32. Its yield, which moves inversely to the price, rose to 6.48 percent from 6.47 percent Monday.
The losses, which erased most of Monday’s gains, came after the latest economic indicators showed the kind of inflation-suggesting strength that could give the Fed more incentive to hike interest rates ahead.
The Conference Board said its index of consumer sentiment rose to a 31-year high of 141.4 in December. Separately, the National Association of Realtors said sales of existing homes jumped 6 percent in November to an annual rate of 5.09 million units, ahead of expectations.
William Sullivan, money market economist at Morgan Stanley Dean Witter, said the reports suggest the Fed’s three rate hikes this year are having scant effect on cooling the economy. As such, more credit tightening may be down the road.
"Today’s data releases did contribute to the weakness in (bond) prices,” Sullivan said. "It suggests the rise in interest rates isn’t having any influence.”
Further pressuring bonds, Sullivan said, is the continued strength in the stock market, which has created trillions of dollars in paper wealth this year.
Stocks rose again Tuesday, in a phenomenon economists say will lead to a surge in consumer spending.
This spending blitz coupled with other signs of economic strength has Sullivan forecasting that the Fed next year will bump its main lending rate to 6 percent from its current 5.50 percent to cool the economy.
The Fed, the nation’s central bank, kept its main lending rate steady last week, out of fear of disrupting markets ahead of the century change. But it warned that the white-hot economy may eventually trigger inflation, mandating rate hikes ahead.
Dollar mixed
The dollar Tuesday rose against the euro but held steady versus the yen. But analysts cautioned against reading much significance into the day’s currency movements, saying the price swings were exacerbated by thin volume.
Just before 3:00 p.m. ET, it cost $1.0062 to buy one euro from $1.1029 Monday, a 0.66 percent gain in the dollar’s value.
Marc Chandler, currency strategist at Mellon Bank, said the day’s euro/dollar movement did not come on any fundamental reason.
"It’s very thin trading,” Chandler said.
The euro’s latest slide comes after the European Central Bank said money supply growth in the euro region rose to an annual 6.2 percent in November from 5.8 percent in October.
"Although the data supported further rate tightening, the euro failed to respond,” Ruesch International said in a note to clients Tuesday.
Markets in London, meanwhile, remained closed for a holiday for a second consecutive day.
Against the Japanese currency, the dollar fell to 102.30 yen from 102.34 Monday.
The dollar’s holding pattern comes two trading sessions after Japan intervened to weaken its resurgent currency. Fear of further intervention kept the yen from rising Tuesday, Donaldson Lufkin & Jenrette said in a note to clients.
In economic indicators, Japan’s unemployment rate fell to an 11-month low Tuesday; the first bright sign in the nation's labor market in some time. But most analysts expect the rate to climb back up next year, Reuters said. 
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