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Long-term debt gains on higher GDP
Investors shun short-term notes on fears of higher interest rates; dollar loses to euro and yen.
February 25, 2005: 4:15 PM EST

NEW YORK (CNN/Money) - Long-term Treasuries rose Friday as investors shied away from short-term notes following an upward revision to gross domestic product that reinforced views that interest rates will head higher.

The dollar lost to both the euro and yen.

The benchmark 10-year note gained 4/32 of a point to 97-26/32 to yield 4.27 percent, while the 30-year bond added 15/32 of a point to 111 even to yield 4.64 percent, lower than 4.66 percent late Thursday. Bond prices and yields move in opposite directions.

The five-year note was flat, yielding 3.90 percent. The two-year note also edged down 1/32 of a point, yielding 3.53 percent.

The bond market reaction was subdued after the Commerce Department announced that GDP grew at a 3.8 percent annual rate in the final quarter of 2004, topping forecasts for 3.7 percent growth.

Immediately following the 8:30 a.m. ET announcement, traders bought long-term paper, sending the price on the 30-year bond up 15/32 of a point.

Recently, Treasuries have taken a beating on fears that demand for U.S. debt from foreign central banks is waning due to the soft dollar and shaky economic situation.

Bonds dipped Thursday after indirect bidders, including foreign central banks, picked up just $7.35 billion, or 31 percent, of the Treasury's latest two-year note auction.

In currency trading, the dollar lost to the euro and yen, with the euro buying $1.3242, up from $1.3201 late Thursday. The dollar bought ¥105.17, down from ¥105.43 late Thursday.  Top of page

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