Bonds sink on signs of strong growth

NEW YORK (CNNMoney.com) -- Treasury prices sank Thursday as several stronger-than-expected economic reports convinced bond traders that interest rates weren't heading lower anytime soon.

The dollar rose against the euro and the yen.

The benchmark 10-year note fell 11/32, or $3.44 on a $1,000 note, to yield 4.69 percent, up from 4.65 percent the day before.

The signs of a stronger-than-expected economy lessened the chances of a rate cut from the Federal Reserve. Investors fled the bond market in anticipation of higher rates in the future. The exodus pulled down the price of Treasurys while sending their yields up. Bond prices and yields move in opposite directions.

The dollar, meanwhile, strengthened in international exchange as funds flowed into a U.S. economy showing new signs of life.

The 30-year bond fell 18/32, or $5.62 on a $1,000 note, yielding 4.81 percent, up from 4.75 percent in the previous session.

The five-year note fell 6/32 to yield 4.69 percent, up from 4.60 percent Wednesday. The two-year note fell one tick to yield 4.80 percent.

In economic news, U.S. consumer confidence rebounded in December, rising to an eight-month high as consumers' view of the labor market improved, a survey showed Thursday.

The Conference Board said its index of consumer confidence climbed to 109.0 in December - its highest reading since April 2006 - from an upwardly revised 105.3 in November. (Full story)

The Chicago PMI, a measure of manufacturing activity, came in at 52.4 - above analysts' consensus of 50.2, according to Briefing.com. The news pointed to persistent strength in yet another area of the economy. Taken together these reports hinted at broad overall strength.

Additionally, the pace of U.S. home sales picked up in November, coming in at an annual rate of 6.28 million for the month. That's up 0.6 percent from the 6.24 million rate in October, and it beat the forecast of a 6.15 million rate from economists surveyed by Briefing.com. But the sales pace was 10.7 percent below year-ago levels of 7.03 million units. (Full story)

Bonds prices had gained briefly in mid-morning trade after the weekly jobless claims report showed claims at 317,000, below analyst expectations. (Full story)

In currency trading, the euro bought $1.314, down from $1.3150 late Wednesday. The dollar bought ¥118.89, up from ¥118.55 in the previous session.

-- from staff and wire reports

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