NEW YORK (CNN/Money) -
Treasury prices moved higher Monday as concerns over attacks like last week's Madrid bombings drew investors to the safe-haven of U.S. government debt a day before a Federal Reserve policy meeting is expected to keep U.S. interest rates at four-decade lows.
But prices slipped from their highs after figures on U.S. industrial production proved stronger than expected, countering a soft survey on regional manufacturing.
Still, none of the numbers are likely to change market expectations of a steady Fed when its policy board meets Tuesday.
At about 3:30 p.m. ET, the benchmark 10-year note rose 5/32 of a point to 101-29/32 with a yield of 3.77 percent, down from 3.78 percent late Friday, and the 30-year note also added 5/32 of a point to 110-2/32 to yield 4.71 percent, down slightly from 4.72 percent late last week.
The two-year note remained at 100-7/32 to yield 1.52 percent and the five-year rose 1/32 to 99-16/32 with a yield of 2.73 percent.
Treasurys had rallied overnight after news that a van packed with explosives was found outside the U.S. consulate in the Pakistani city of Karachi Monday, two days before U.S. Secretary of State Colin Powell visits the country.
That report came as evidence mounted that al Qaeda -- the group Washington blames for the Sept. 11, 2001, attacks on U.S. cities -- may have been responsible for Thursday's explosions in Madrid, which killed 200 people.
And over the weekend, Spain's Socialist Party was swept into power in a general election, three days after the commuter train bombings.
Spain's prime minister-elect said he plans to pull 1,300 Spanish troops out of Iraq in June.
All the news dragged global stocks lower.
The upbeat industrial data sparked a brief wave of profit-taking in bonds. Output climbed 0.7 percent after a 0.8 percent gain in January, easily beating forecasts of a 0.4 percent rise. Manufacturing output rose a healthy 1.0 percent, while capacity utilization in that sector expanded to its highest level since June, 2001.
However, there were signs activity was cooling this month. The New York Fed said its main index of business conditions slowed sharply, to 25.33 in March from a record high of 42.05 in February. There was also a sharp fall in the number of employees index, a blow to those looking for a strong revival in payrolls any time soon.
In the currency market, the dollar fell against the euro and the yen.
The euro bought $1.2272, up from $1.2222 late last week, and the dollar purchased ¥110.33, down from ¥110.89, last Friday.
-- from staff and wire reports
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