NEW YORK (CNN/Money) - Treasury prices slid for a fourth straight session Friday as investors unwound bets that the U.S. economy would weaken enough to prompt a slowdown in Federal Reserve rate increases.
In late afternoon trading, the benchmark 10-year note slid 17/32 of a point to 100-15/32 to yield 4.19 percent, up from 4.12 late Thursday. The 30-year bond tumbled 25/32 of a point to 106-8/32 to yield 4.95 percent, up from 4.89 late Thursday. Bond prices and yields move in opposite directions.
The two-year note stood unchanged at 99-24/32 to yield 2.64 percent, while the five-year note lost 8/32 of a point to yield 3.43.
In the currency market, the dollar recovered from Thursday's slide against the euro and the yen, rallying as traders anticipated upbeat manufacturing data.
The euro bought $1.2410, down from $1.2439 late Thursday, and the dollar bought ¥110.47, up from ¥110.05.
While the latest economic readings were mixed, there were enough pockets of strength to suggest the Fed would again increase interest rates when it meets in November.
In particular, early figures on auto sales suggested consumers went on another buying spree in September. Analysts said sales of North American-made vehicles looked to be running at a huge 14.8 million annual rate, way above forecasts of just 13.5 million.
Such a pace would bode well for a rise of above 4.0 percent in real consumption in the quarter and analysts may have to revise up their forecasts for gross domestic product.
"A much stronger-than-expected showing -- the late September incentives after a poor start to the month had a large impact," David Sloan, an economist at 4CAST, told Reuters. "This should ensure firm Q3 consumer spending data."
The main release of the morning showed the Institute for Supply Management's manufacturing index dipped to 58.5 in September from 59.0 in August. Traders had been braced for a much stronger number after a firm Chicago-area survey released on Thursday, and bonds tried to bounce at first.
But sellers were quick to pounce, just as they have been since yields stalled at 3.96 percent lows early this week.
Analysts noted that, despite the September dip, the ISM index is still at a level historically associated with economic growth of 4.0 percent or more.
Other data on consumption this week confirmed spending had also picked up markedly from the second quarter and had many analysts revising up their forecasts for gross domestic product growth in the third quarter to above 4.0 percent.
Bond bulls are worried that such resilience could encourage the Fed to keep raising interest rates well beyond what the market currently has factored into prices.
-- from staff and wire reports
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