Bonds mixed after choppy session
Long-term Treasurys show slight gains, as investors look for safety after Fannie and Freddie rescue report and cheer Paulson's talk of a stronger dollar.
NEW YORK (CNNMoney.com) -- Government bond prices seesawed Thursday, as investors weighed mixed economic news out of the housing and currency markets.
The benchmark 10-year note rose rose 3/32 to 100 21/32 and yielded 3.81%, down from 3.82% late Wednesday. Bond prices and yields move in opposite directions.
The 30-year long bond rose 1/32 to 99 5/32. Its yield held steady at 4.42%. The 2-year note fell 2/32 to 100 30/32, and its yield rose to 2.42% from 2.39% late Wednesday.
Fannie Mae and Freddie Mac fallout. Shares of the government-sponsored mortgage finance companies continued to plunge on worries about a potential collapse. Bush administration discussions of what to do should Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) fail have been amplified in recent days, The Wall Street Journal reported.
"Any talk of a Fannie and Freddie collapse is certainly supportive of bonds because of the fear factor," said Avalon Partners Chief Economist Peter Cardillo. "Fears over the continued turmoil in the financial markets continue to set the stage for the lower end of the yield curve for Treasurys."
Paulson speech. Talk of a stronger dollar also helped lift bond prices. In congressional testimony, Treasury Secretary Henry Paulson said the nation wants a stronger dollar, suggesting the government is ready to act to combat inflation.
"That's a very strong statement, because he's never used the term 'we want' before," said Cardillo. "That could indicate that maybe - just maybe - the Treasury Department may be reversing course and a stronger dollar is possible.
Bonds will lose their value over time due to inflation, so a stronger dollar generally supports Treasury prices.
The dollar showed slight gains against other currencies, adding to gains made in the previous session. Investors remained concerned with the continuing credit crisis and problems in the stock market.
Other markets. Crude prices gained $5 a barrel Thursday, after the Organization of Petroleum Exporting Countries said oil demand will soar 50% by 2030. 
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