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NEW YORK (CNN/Money) -
Bonds turned lower Thursday afternoon, hurt by Federal Reserve Chairman Alan Greenspan's comments and several strong economic reports.
The dollar gained versus the euro and yen.
The benchmark 10-year note fell 11/32 to 96-28/32 to yield 4.65 percent, up from 4.61 percent in the previous session, and the 30-year bond slumped 22/32 to 107-21/32 to yield 4.84 percent, up from 4.80 percent in the preceding session. Bond prices and yields move in opposite directions.
In shorter-dated debt, the two-year note lost two ticks, yielding 4.45 percent. The five-year note fell 7/32 to 4.54 percent.
Fed Chairman Greenspan -- speaking before Congress Thursday morning -- said that the economy remains strong and cautioned about the threat of higher inflation, essentially reiterating the central bank's Tuesday message.
On Tuesday the central bank boosted the fed funds rate, a key short-term lending rate, by a quarter percentage point to 4 percent, the 12th rate hike in a row.
"Mr. Greenspan's testimony suggests that the Fed chairman remains firmly committed to further rate hikes," Ian Shepherdson, chief U.S. economist at High Frequency Economics, told Reuters.
In other economic news, third-quarter business productivity grew at a 4.1 percent annualized rate in the third quarter, the Labor Department said early Thursday, versus an upwardly revised 2.1 percent annualized rate in the second quarter. Economists surveyed by Briefing.com expected it would grow at a 2.5 percent rate.
The Institute for Supply Management's services index rose to 60 in October from 53.3 in September, beating Wall Street's median forecast for a rise to 57.
The Labor Department said growth in nonfarm productivity, or worker output per hour, grew at a 4.1 percent annual rate from July to September after an upwardly revised 2.1 percent second-quarter gain.
And Friday's critical monthly jobs report is expected to show that nonfarm payrolls rose 100,000 in October, bouncing back from a hurricane-induced loss of 35,000 in September.
The numbers indicate some inflationary pressure, which hurts bonds because it erodes the value of the fixed-interest paying investment. Higher interest rates make new bond issues more attractive and depress the prices of those sold on the secondary market, which are the prices quoted here.
However, rising interest rates generally help the dollar, as they make dollar-denominated securities more attractive to foreign investors.
The dollar, which hit a 25-month high against the yen Monday, continued to gain against the yen, buying ¥117.17, up from ¥116.86 late Wednesday. The greenback also rose against the euro, which bought $1.1948 down from $1.2071 in the previous session.
-- from staff and wire reports
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