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Bonds fall as Dow rallies
Jobs report not weak enough to continue rally sparked by Thursday's London attacks.
July 8, 2005: 4:25 PM EDT

NEW YORK (CNN/Money) - Bonds fell Friday after a jobs report wasn't weak enough to excite investors and a rallying Dow pulled money out of government debt.

The dollar was little changed against the euro and yen.

The benchmark 10-year note edged slipped 6/32 of a point to 100-9/32, to yield 4.08 percent, up from 4.07 late Thursday. The 30-year bond lost 12/32 of a point to 115-28/32 to yield 4.34 percent, up from 4.32 in the previous session. Treasury prices and yields move in opposite directions.

In shorter-dated government debt, the five-year note shed 5/32 of a point to yield 3.87 percent, and the two-year note fell 3/32 of a point to yield 3.76 percent.

The government said U.S. employers added 146,000 jobs to payrolls in June. While that figure was below the 195,000 economists surveyed by Briefing.com had expected, it wasn't low enough to convince traders the Fed might take a rate hike pause.

"For the Fed, I don't think it changes much," Alan Ruskin, head of research at 4Cast Ltd, told Reuters. "It's not weak enough that it would change their measured tightening path."

When the Fed raises higher short-term interest rates to check inflation, bonds are usually hurt since inflation erodes the value of the fixed-interest paying investments.

The Dow also gained 1.5 percent Friday as traders focused on a falling unemployment rate in the jobs report and solid earning from aluminum producer Alcoa (Research). The rising stock market drew money from Treasuries.

Bonds are also coming off the heels of Thursday's terrorist attacks in London, which spurred buying of the safe-haven investment and pushed the yield on the 10-year benchmark note to an intraday low of 3.94 percent. But most of those gains were pared before the end of the day.

In currency trading, the dollar edged down against the euro and rose slightly against yen.

The euro bought $1.1959, up from $1.1950 late Thursday, while the dollar bought ¥112.19, up from ¥112.01 the previous session.

-- from staff and wire reports

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