NEW YORK (CNNfn) - Treasury bond prices extended their losses Friday, plunging more than a point, after a report showed surprising strength in the manufacturing sector, heightening fears of rising inflation.
Just before 11 a.m. ET, the price of the benchmark 30-year Treasury bond fell 1-6/32 to 99-29/32. Its yield, which moves inversely to the price, rose to 6.13 percent form 6.04 percent Thursday.
The bond sell-off followed a report from the National Association of Purchasing Management showed its manufacturing index rose to 57.8 in September from 54.2 in August, well above the 54.3 reading economists expected.
More significantly, the index's price component, a measure of inflationary pressures, rose to 67.6 from 59.8 in August.
The NAPM report, coupled with earlier data showing Americans continued to spend at a brisk pace last month, could spark fears that the Federal Reserve will raise rates next week to stem inflation and cool an overheating economy.
Bonds began falling Friday after the Commerce Department said personal income rose 0.5 percent and consumer spending grew 0.9 percent in August, ahead of Wall Street forecasts. The savings rate was negative 1.5 percent, the ninth straight month Americans dipped into their savings instead of adding to them.
The figures indicate Americans continue to spend briskly, buoyed by a rising stock market and low unemployment. Income gains were robust.
Currencies remain steady
The dollar, already lower against the yen and the euro overnight, showed scant reaction to the morning's data.
Just before 11 a.m. ET, the dollar slipped to 105.10 yen from 106.37 Thursday, a 1.19 percent drop in the greenback's value.
It cost $1.0709 to buy one euro, from $1.0684 Thursday, a 0.23 percent fall for the dollar.
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