Bonds edge lower as stocks climb
Risk appetite increases despite inflation fears. Investors look for bargains in the stock market and eye lower oil prices.
NEW YORK (CNNMoney.com) -- Bond prices fell late Thursday as investors ventured back into the stock market to scoop up battered shares at bargain prices.
Treasurys prices had risen earlier in the session as investors looked past a report that showed consumer prices soared in July and focused on signs that inflation may come down in the future.
The benchmark 10-year note slipped 1/32 to 100 2/32. Its yield was 3.89%.
The 30-year bond fell 2/32 to 99 16/32 with a yield of 4.53%.
The 2-year note edged lower to 100 19/32 with a yield of 2.44%.
Stocks closed higher after struggling in early trade on inflation concerns. But the major indexes headed higher as investors were encouraged to scoop up shares that had been hit hard in a recent retreat.
In addition to bargain hunting, stocks were pushed higher by a $2 decline in the price of oil. The oil market regained some ground latter in the session and settled 99 cents lower for the day.
Inflation concerns. The Labor Department's Consumer Price Index showed the annual inflation rate jumped to 5.6% in July - the highest point since January 1991 - from 5% the month before. The increase was largely driven by the cost of energy, which rose 4% on a monthly basis and 29.3% annually.
Rising inflation eats into the value of fixed income investments and signs of rising prices normally push bond prices lower. But the bond market initially discounted the report as a "lagging indicator," according to Bill Larkin, a portfolio manager at Cabot Money Management in Boston.
Inflation fears were also tempered early on by a government report showing signs of improvement in the labor market, "more than offset the inflation fear."
The Labor Department reported that the number of Americans filing for state jobless benefits decreased by a seasonally adjusted 10,000 to 450,000 in the week ended August 9.
While the report was seen as positive, it was still less than the 436,000 decline that economists were expecting, according to estimates gathered by Briefing.com. 
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