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Bonds lower on rate fears
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March 6, 2000: 3:23 p.m. ET
Rate hike fears weigh down Treasurys; Greenspan remains vigilant on inflation
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended lower Monday, as fears of rising interest rates from the Federal Reserve continued to pressure the market.
"There's only 15 days to FOMC (Federal Open Market Committee). We're going to get jitters ahead of that," said Will Jarosak, head of finance at Fuji Securities, referring to the upcoming Fed monetary policy meeting.
Although Fed Chairman Alan Greenspan's speech on technology and the economy in Chestnut Hill, Mass., offered nothing new, he again signaled that the Fed would continue to hike rates.
Shortly before 3 p.m. ET, the 10-year Treasury note fell 8/32 to 100-18/32. Its yield, which moves inversely to its price, rose to 6.42 percent from 6.38 percent Friday. The 30-year bond dipped 9/32 to 101-11/32, its yield rising to 6.14 percent from 6.12 percent Friday.
The Fed ahead
In the first of three scheduled appearances this week, the Fed chief Monday reiterated his recent Humphrey-Hawkins testimony to Congress, warning that the U.S. central bank would remain "vigilant" against inflation.
Analysts said Greenspan's speech, coupled with comments made late Friday by Fed Governor Laurence Meyer, heightened concerns about more rate hikes.
"Meyer really drove it home. He said once they (the Fed) see clear-cut signs of inflation, they will be considerably more aggressive," Fuji's Jarosak said.
The FOMC, the Fed's policy making arm, hiked short-term interest rates four times since June in an effort to slow the U.S. economy and pre-empt inflation. Despite its efforts, consumer spending and confidence remain strong.
Although Friday's U.S. employment report suggested a slowing of job growth, with only 43,000 non-farm jobs added to the economy, there still appears no sign that the economy overall is slowing down. Analysts widely expect the central bank to raise rates again when it meets on March 21.
"He's still talking tough, even after Friday's number," said a trader at a U.S. investment firm.
Greenspan is scheduled to speak again on Wednesday in Texas and Friday in St. Louis. Richard Yamarone, senior economist at Argus Corp., expressed caution about the speeches.
"There is too much talk in one week without the intent of issuing a warning. The market is looking for a tip-off -- maybe an early warning of a 50 basis point (one-half percentage point) increase," he said.
Despite market weakness, traders noted Treasurys traded within a narrow range throughout the session amid low volume.
Investors await Tuesday's revised productivity figures for the fourth quarter, which measure worker productivity. Analysts surveyed by Briefing.com expect productivity to be upwardly revised to 6.7 percent from 5.0 percent originally reported.
(Click here for a look at Briefing.com's economic calendar.)
Dollar weakens
The dollar fell slightly against the major currencies Monday. Shortly before 3 p.m. ET, the euro changed hands at 95.91 U.S. cents, up from 95.64 cents Friday, a 0.3 percent loss in the dollar's value.
Tim Fox, currency strategist at Standard Chartered Bank, spoke about the euro's overall weakness. He told CNN's Ahead of the Curve that a lack of confidence pressured the single currency. (176.4K WAV) (176.4K AIFF)
Meanwhile, the dollar traded at 107.58 yen, down from 107.73 yen Friday, a 0.1 percent loss in the dollar's value. 
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