Bonds dip in profit taking

NEW YORK (CNNMoney.com) -- Bonds dipped Wednesday as profit taking from a recent rally overshadowed the release of soft economic reports. The dollar gained slightly against the euro and the yen.

The 10-year lost 13/32, or $4.06 on every $1,000 spent, to yield 4.78 percent, up from 4.74 percent Tuesday evening. The 30-year declined 12/32, or $3.75 on a $1,000 bond, to yield 4.92 percent up from 4.90 percent. Bond prices and yields move in opposite directions.

The 5-year fell 11/32 to yield 4.64 percent, while the 2-year lost 5/32 to yield 4.60 percent.

Bonds have been trading inversely to stock prices but that relationship was less evident on Wednesday, as equities traded flat to lower, Reuters reported.

"In the short term, bonds were overbought, without a doubt," William O'Donnell, director of interest rate strategy at UBS in Stamford, Connecticut, told Reuters.

A report from ADP showed the private sector likely added 48,000 jobs in July, well below economists' expectations for a reading of 100,000.

The Institute for Supply Management's index of national factory activity for July came in at its lowest level since March and below forecasts. The index fell to 53.8, down from 56.0 in June. Analysts had been looking for a more modest dip to 55.5, although any reading above 50 still points to expansion.

Some brighter news for the economy and the slumping housing market came from June pending home sales, which rose unexpectedly when analysts had been looking for a decline.

The latest reading on the state of the battered U.S. real estate market showed surprising strength as the pending home sales index jumped 5 percent to 102.4 in June. Economists surveyed by Briefing.com had forecast the index would slip 0.6 percent after a revised 3.7 percent drop in the May report.

In currency trading, the euro bought $1.367 down from $1.368. The dollar bought ¥118.79 up from ¥118.53 in the previous session.

-- from staff and wire reports