Bonds give back a bit

Treasurys inch lower as investors digest modest drop in U.S. stocks, big declines overseas.

NEW YORK ( -- Bond prices slipped Monday as traders looked to volatile trading in U.S. stock markets.

Friday capped the worst week for the stock market in four years, and the selloff in stocks drove Treasury bonds to their biggest gains in six months. Investors, who often flock to bonds for safety, were concerned about the lagging U.S. housing market and foreign investors unloading risky corporate bonds.

On Monday the dollar gained against the euro and fell against the yen.

The benchmark 10-year note fell 4/32, or $1.25 on a $1,000 note, to yield 4.52 percent, slightly up from 4.51 Friday.

The 30-year bond slipped 8/32, or $2.50 on a $1,000 bond, to yield 4.66 percent, up from 4.65 percent in the previous session. Bond prices and yields move in opposite directions.

The five-year note lost 3/32 to yield 4.46 percent, while the two-year note was unchanged to yield 4.55 percent.

Bonds eased as traders watched the choppy stock market trading. U.S. stocks opened lower Monday and tried to recover through the late morning, but then turned negative again near midday.

The bond market was little changed earlier after comments by St. Louis Federal Reserve Bank President William Poole, who said slow inflation helped cushion a cooling housing market.

A report on the service sector of the economy also failed to move bonds. The Institute for Supply Management's services index, which measures the growth in the service sector, saw a sharp decline, retreating from an eight-month high.

In currency trading, the euro bought $1.3099, down from $1.3199 Friday. The dollar bought ¥115.81, down from ¥116.67 the previous session.

Friday: Bonds lifted by Wall Street's slide

A Monday mess for Wall St. Top of page