NEW YORK (CNN/Money) - Bond prices recovered earlier losses and traded nearly flat on Monday as investors prepared to absorb $25 billion in new bonds this week.
At about 3:45 p.m. ET, the benchmark 10-year Treasury note gained 3/32 of a point to 99-29/32 to yield 4.76 percent, down from 4.78 percent late last week. The 30-year bond rose 2/32 of a point to 98-27/32 to yield 5.46 percent, the same as Friday. Prices and yields move in opposite directions.
The two-year note rose 2/32 of a point to 99-22/32 to yield 2.66 percent. Earlier, yields hit a two-year high of 2.74 percent, having climbed all the way from a 1.45 percent trough in March. The five-year note climbed 4/32 of a point to yield 3.92 percent.
In the currency market, the Japanese yen staged a powerful rally against the dollar after a nearly 3 percent gain in Tokyo stocks reflected the likelihood that Japanese assets are benefiting from a surge of inflows from abroad.
The dollar also sagged to a two-month low against the euro as last week's U.S. jobs data failed to spur demand for dollars.
Shortly after 3:45 p.m. ET, the euro bought $1.2318, up a bit from $1.2290, and the dollar bought ¥109.60, down from ¥111.04 late Friday.
Trading was somewhat thin as bond dealers were keen to find out whether the Bond Market Association would recommend the market close Friday in honor of the late President Ronald Reagan.
President Bush has declared Friday a federal holiday, interrupting the data calendar, and the BMA was holding a conference call with members Monday afternoon to decide if the bond market should also shut.
The Labor Department has moved up the release of the May producer prices report to Thursday from Friday.
The market was eagerly awaiting appearances from Federal Reserve Chairman Alan Greenspan on Tuesday and Thursday to see if he reiterates the assessment of other central bankers that inflation is not yet a real danger.
Any indication that the Fed chief is worried about price increases could trigger a sell-off in government debt, as it would cast doubt on the central bank's ability to remain "measured" in its approach to tightening monetary policy.
The market must also get through auctions of five- and 10-year paper on Wednesday and Thursday respectively. Treasury is set to sell $15 billion of five-year paper and $10 billion of reopened 10-year notes.
-- Reuters contributed to the story
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