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Weak dollar hurts bonds
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March 1, 2000: 3:19 p.m. ET
Dollar's plunge, rising oil prices fuel pressure; economic news ignored
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended lower Wednesday, as a weak dollar and rising commodity prices, particularly oil, fueled pressure.
Meanwhile, the rest of the curve, including the 10-year note, managed gains despite two economic reports, which suggested continued strength in the U.S. economy.
Shortly after 3 p.m. ET, the 30-year bond fell 10/32 to 101-6/32. Its yield, which moves inversely to price, rose to 6.16 percent from 6.13 percent Tuesday. The 10-year Treasury note rose 6/32 to 100-26/32 -- its yield falling to 6.38 percent from 6.41 percent Tuesday.
The U.S. dollar plunged to a one-month low against the Japanese yen. Analysts attributed the decline to the continued strength of Tokyo's benchmark Nikkei index, which ended at its highest level in more than two years, rising above the psychologically significant 20,000 level.
Analysts said the yen's gain signaled confidence about Japan's economic recovery. "This (yen strength) highlighted the fact that the market remains fundamentally bullish on Japan's economy recovery prospects," said Alex Beuzelin, senior market analyst at Ruesch International.
 Shortly after 3 p.m. ET, the dollar traded at 107.13 yen, down from 110.21 yen Tuesday, a 2.8 percent loss in the dollar's value.
Meanwhile, the euro traded at 97.46 U.S. cents, up from 96.35 cents Tuesday, a 1.2 percent loss in the dollar's value. Ruesch International's Beuzelin said speculation that the European Central Bank may raise interest rates at its Thursday monetary policy meeting bolstered the euro.
Commodities, stocks weigh
Strength in commodity prices, which suggest inflation, also contributed to losses among bonds. In New York, April crude oil futures reached nine-year highs Wednesday, last trading up $1.05 at $31.48 a barrel.
A surging Nasdaq composite index added fuel to the fire with the tech-heavy index surpassing the 4,700 level. The performance of U.S. equities has recently dominated bond market participants' attention.
Key economic data discounted
The latest economic news suggested continued strength in the U.S. economy. Growth in U.S. manufacturing continued, according to the National Association of Purchasing Management (NAPM). The index, a key measure of national manufacturing activity, rose to 56.9 in February from 56.3 in January, slightly above expectations.
A level above 50 indicates increased manufacturing activity. The prices-paid component, a measure of inflation, rose to 74.1 from 72.6 in January, reflecting higher oil prices.
Separately, U.S. construction spending soared 2.7 percent in January to a record $751.8 billion against a revised 2.1 percent gain in December, the Commerce Department said. The number was far greater than the 0.3 percent increase analysts forecasted.
"The data was strong, but people expected it," said Bill Hornbarger, fixed-income strategist at A.G. Edwards. "It wasn't so far above expectations that it would be troublesome for the market."
Brian Fabbri, economist at Paribas, told CNNfn's market coverage although the data did not greatly impact the market, it reinforced the belief the Federal Reserve will hike interest rates. (176.4K WAV) (176.4K AIFF)
The central bank increased short-term interest rates four times since last June in an effort to keep inflation at bay. The belief is widespread that it will hike rates again by a quarter percentage point when it meets on March 21.
Analysts said investors expressed caution ahead of Friday's key employment report. Analysts surveyed by briefing.com forecast 235,000 new non-farm jobs were created in February against 387,000 in January, and unemployment will hold steady at 4.0 percent.
(Click here for a look at Briefing.com's economic calendar.) 
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