Bonds get boost as stocks slump

NEW YORK (CNNMoney.com) -- Bond prices climbed Tuesday as stocks sold off on credit concerns, after minutes from the latest Federal Reserve policy meeting failed to give investors many clues on future rate moves.

The dollar fell sharply against the yen and gained slightly against the euro.

The closely-watched three-month Treasury bill, the focus of last week's market, yielded 4.39 percent, down from 4.56 earlier Tuesday, suggesting that investors were looking to the shorter-dated securities for safety.

The benchmark 10-year note rose 16/32, or $5.00 on a $1,000 note, to yield 4.52 percent, down from 4.57 late Monday. Bond prices and yields move in opposite directions.

The 30-year note was little changed, yielding 4.86 percent.

The two-year bond gained 8/32 to yield 4.09 percent, while the five-year note climbed 16/32 to yield 4.23 percent.

Bond prices pared some gains after the Conference Board said consumer confidence fell less than expected in August, but continued weakness in equity markets kept bonds higher.

"The number this morning is not bad enough that (it) would trigger an imminent Federal Reserve rate cut and so this is disappointing to some people in the stock market," Michael Cheah, senior portfolio manager at AIG SunAmerica Asset Management in Jersey City, New Jersey told Reuters.

The 2:00 p.m. ET release of the minutes from the last Fed meeting offered little new information on the central bank's economic outlook.

The minutes from the Aug. 7 meeting showed that at the time, the bankers were not overly worried about the impact of the subprime and credit market turmoil on the economy. However, the Fed did state that if the economy should deteriorate, it was prepared to cut rates.

At the meeting, central bank policymakers left the key fed funds rate unchanged at 5.25 percent where it has remained since last summer. The Fed acknowledged the recent subprime and credit market crises, which have roiled global markets, but said that inflation has remained its main concern.

In currency trading, the dollar fell against the yen, trading at ¥114.40, down from ¥116.08 Monday, while the euro bought $1.3609, down from $1.3647 Monday.