Bonds end way down after Fed speeches

NEW YORK (CNNMoney.com) -- Treasury prices tumbled on Friday as investors reacted to speeches by several Fed officials who said inflation-fighting efforts may not be over.

The dollar rose versus the euro and the yen.

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The benchmark 10-year note fell 12/32, or $3.75 on a $1,000 note, to yield 4.79 percent, up from 4.73 percent late Thursday.

The 30-year bond declined 23/32, or $7.18 on a $1,000 bond, to yield 4.87 percent, up from the previous session.

Bond prices and yields move in opposite directions.

In shorter-dated debt, the five-year note fell six ticks to yield 4.78 percent, while the two-year note fell 2/32, yielding 4.91 percent.

In economic news, St Louis Fed President William Poole said core inflation above 2 percent was unacceptable, and that the central bank would have to take action if it remained at these levels.

Poole also said he expected inflation to continue coming down, but the market seemed bent on focusing on his warning about a possible need for further tightening - especially ahead of key Congressional testimony from Fed Chairman Ben Bernanke.

Sandra Pianalto of the Cleveland Fed sounded much more sanguine about inflation, saying as central bankers do that it was a concern but highlighting weakness in the economy to a greater extent than Poole.

But again, a bond market that some described as overbought only had ears for hawks, ignoring Pianalto's suggestion that more pain may yet come from the popping of the housing bubble.

No economic reports are due Friday, but next week brings a steady stream of reports. Major reports due next week include January retail sales. The Producer Price Index and housing starts also are due to be released.

In currency trading, the euro bought $1.3005, down from $1.3038 late Thursday. The dollar bought ¥121.73, up from ¥121.07 in the previous session.

-- from staff and wire reports

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