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Bonds continue to tumble
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April 12, 2000: 4:27 p.m. ET
Investors shift money out of Treasurys into agency, corporate securities
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended sharply lower Wednesday for the second consecutive session, as investors continued to shift money out of longer-dated Treasury maturities into non-government issues such as agency bonds.
The heavy selling occurred despite another massive decline among U.S. technology shares, with the Nasdaq composite index plunging 7 percent. Treasury prices often advance when stocks decline as investors flee equities for the relative safety of government securities.
 At around 3:30 p.m. ET, the 30-year Treasury bond fell 1-1/32 points to 105-25/32. Its yield, which moves in the opposite direction to its price, rose to 5.83 percent from 5.77 percent Tuesday. Ten-year Treasury notes dropped 24/32 to 103-25/32, their yield rising to 5.94 percent from 5.89 percent Tuesday.
The gap between Treasury and non-government bond yields narrowed as agency bonds remained in favor. Agency securities are issued by quasi-government institutions such as Fannie Mae and Freddie Mac. The upward momentum in this sector comes in the wake of Tuesday's market activity, in which investors snapped up agency and other non-government securities, seen as a good buying opportunity.
In addition, comments by Federal Reserve Governor Laurence Meyer  contributed to losses. Meyer, speaking to a business group in Toronto, reiterated his belief that the central bank may need to hike interest rates in an aggressive manner. He said the U.S. economy is growing at a faster pace than what is sustainable.
However, one analyst said Meyer's remarks were nothing new, noting he has always taken this stance.
With an environment of rising interest rates, market participants were cautious ahead of key March economic data, including Thursday's retail sales and producer price index (PPI) and Friday's consumer price index (CPI).
The reports are expected to shed light about the direction of future monetary policy.
The Fed has increased short-term interest rates five times in a "gradualist" manner since June, in order to slow the economy and pre-empt inflation. But the tightening appears to have little impact as consumer demand remains strong. Analysts widely expect the central bank to boost rates by a quarter point when it meets on May 16.
Dollar falls versus yen
In the currency markets, the dollar recovered from its lowest levels against the Japanese yen Wednesday. In overnight trade, the yen rose from a two-week low against the dollar, following remarks by Bank of Japan (BOJ) Governor Masaru Hayami, who hinted the BOJ may eliminate its long-standing zero-interest rate policy.
Analysts said there was low volatility in the currency markets as traders await the key economic data and the weekend's Group of Seven (G-7) meeting in Washington to determine new direction.
At around 3:30 p.m. ET, the dollar traded at 105.79 yen, down from 106.89 yen Tuesday, a 1 percent loss in the dollar's value.
Meanwhile, the euro continued to trade in close ranges, changing hands at 95.64 cents, down from 95.91 cents Tuesday. 
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