NEW YORK (CNN/Money) - Treasury prices fell Tuesday in a delayed reaction to gains in global stock markets, though a hesitant start from Wall Street allowed bonds to avoid further losses. Meanwhile, the dollar surrendered its gains against the euro.
Just before 4 p.m. ET, the benchmark 10-year note fell 11/16 of a point in price to 99-1/4 to yield 4.34 percent, up from 4.27 percent late Friday. The 30-year bond slipped 31/32 of a point to 101-26/32 with a yield of 5.25, up from 5.18 percent Friday.
The two-year note lost 3/32 of a point to 99-7/8, yielding 1.69 percent, and the five-year note declined 3/8 of a point to 99-9/16, with a yield of 3.22 percent. In observance of the Columbus Day holiday, the bond market was closed Monday.
In the currency market, the dollar bought ¥108.93, hardly moved from ¥108.95 late Monday. The euro bought $1.1730, up slightly from $1.1703 late Monday.
"In part, we're playing catch-up to Monday's rise in stocks," said one trader at a U.S. primary dealer. "There's also a lot of buzz around about good earnings reports and how economists are revising up forecasts for economic growth -- it's not a great background for bonds."
Figures out last week showing a surprise narrowing in the trade deficit in August prompted some analysts to nudge up already lofty forecasts for third-quarter gross domestic product, with many now looking for 6.0 percent growth or more.
Adding to the early pressure were comments from St. Louis Federal Reserve Bank President William Poole that, while he was comfortable with the present low level of interest rates, this level should be viewed as transitory.
Poole said there was a distinct possibility that trend productivity had increased and that, if so, the real equilibrium level of interest rates would also need to rise, in this case to around 4.0 percent in the long run.
Since Fed funds are currently at just 1.0 percent, that implies considerable upside risk for interest rates in the future, noted dealers.
The economic data out Tuesday was of only secondary importance and had little impact on the market.
The latest reading of consumer sentiment showed some stabilization after recent falls, though worries about jobs remained. Investor's Business Daily and TechnoMetrica Market Intelligence said their monthly economic optimism index edged up to 53.3 in October from 52.5 in the preceding month.
The Fed Bank of Richmond reported a drop in its index of regional manufacturing to -7 in September from zero the month before, though its measure of service revenue climbed to 19 from 9 in August.
More important readings on weekly jobless claims and September retail sales, consumer prices, and industrial production are due Thursday.
-- Reuters contributed to this story.
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