NEW YORK (CNNfn) - Treasury bonds edged lower for the first time in a week Monday, as investors squared positions ahead of the Federal Reserve's key meeting on interest rates.
The beleaguered euro, meanwhile, plunged to a fresh lifetime low against the dollar.
Bonds drifted lower for much of the day, showing little response to news that consumer spending rose strongly in December -- another sign that the economy continues to grow at a pace that may be too fast for Fed officials, who meet on Tuesday.
The spending and income data "are not big movers, particular ahead of the Fed meeting," said Bruce Alston, who manages $1.5 billion in bonds for Value Line Asset Management.
Another spike in oil prices also failed to affect bonds.
Just before 3:30 p.m. ET, the price of the benchmark 30-year Treasury bond fell 16/32 to 95-6/32. Its yield, which moves inversely to its price, rose to 6.49 percent from 6.45 percent Friday.
The slight sell-off comes a day before the Fed, at its first meeting of the year, is expected to raise its main lending rate by a quarter of a percentage point to slow the economy and pre-empt rising inflation.
Analysts said the latest piece of strong economic data did nothing to alter this forecasts, which would bring the Fed's main lending rate to 5.75 percent. Personal income rose 0.3 percent in December, while spending gained 0.8 percent, the Commerce Department said.
"The consumer sector has been on of the strongest in the economy, and that's the sector that (Federal Reserve chairman Alan) Greenspan worries about," Michael Moran, chief economist at Daiwa Securities, told CNNfn.
Bonds showed little response to the day's rise in oil prices, which generally trigger fears over rising inflation. Bond investors fret that climbing inflation will erode the value of their fixed-income securities. Light sweet crude for March delivery jumped 61 cents to $27.83 a barrel.
"That doesn't help," said Value Line's Alston, commenting on the price rise.
While Alston noted that inflation remains largely subdued, he said the economy might be growing at a pace that's too fast for Fed officials liking.
Evidence of that blistering pace came Friday, when the nation's gross domestic product, the broadest measure of the economy, and the employment cost index, a measure of wage inflation, soared past analysts' expectations.
The Fed, the nation's central bank, raised interest rate three times last year. But tighter credit has had little apparent effect. Unemployment remains at a 30-year low, consumer spending is buoyant, and the stock market -- though off its highs -- has created trillions of dollars in paper wealth.
In other economic news Monday, the Chicago Purchasing Managers Index fell to a seasonally adjusted 55.6 in January, above expectations. The index is seen as a barometer for the national manufacturing index released Tuesday.
Euro woes don't let up
The euro fell to a lifetime intraday low against the dollar Monday that pushed the 11-nation currency down about 16 percent since its inception early last year. The dollar, meanwhile, rose to a three-and-a-half month high against the yen.
Just before 3:30 p.m. ET, the euro dropped to 97 cents from 97.84 cents Friday, and an intra-day lifetime low of 96.67 cents. The U.S. currency, meanwhile, rose to 107.36 yen from 106.88 Friday.
Alex Beuzelin, senior market analyst at Ruesch International, linked the dollar's gains to continued evidence that the U.S. economy continues to charge ahead of its overseas counterparts.
"They are still vastly under-performing the U.S. economy," Beuzelin said of Europe and Japan.
The United States' strong fourth quarter gross domestic product and buoyant consumer spending data, Beuzelin said, all increase the likelihood of higher interest rates ahead. Higher rates would make dollar-denominated securities, which must be bought in local currency, more attractive to overseas investors.
Beuzelin said some of the euro's weakness also can be attributed to euro-zone officials who, unlike Japanese officials, have generally refrained from verbally supporting their currency in times of weakness. 
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