NEW YORK (CNN/Money) -
Treasury prices fell again Thursday as traders remained focused on fresh signs that price pressures are building in the economy.
Expectations for the Fed to keep raising interest rates to fight inflation pressured bonds, but boosted the dollar to a two-year high against the yen.
The 10-year bond lost 5/32 of a point to 98-9/32 to yield 4.46 percent, up from 4.44 percent late Wednesday. The 30-year bond tumbled 18/32 of a point to 109-31/32 to yield 4.69 percent, up from 4.66 percent in the previous session. Bond prices and yields move in opposite directions.
In shorter-dated debt, the five-year note declined 7/32 of a point to yield 4.31 percent, while the two-year note fell one tick to yield 4.23 percent.
Treasury prices fell across the board, with the yield on the benchmark 10-year note rising to as high as 4.50 percent, after the Labor Department said U.S. import prices rose 2.3 percent in September, making it the largest advance in nearly 15 years. Export prices also made hefty gains, rising 0.9 percent last month.
The rise in import goods prices came mainly from energy and other commodities, and bond prices fell as traders moved away from long-range paper on the inflationary signs. Inflation hurts bonds because it erodes the value of the fixed-interest paying investments.
The monthly report on import and export prices isn't a major economic release and usually doesn't have a large impact on markets, but recent warnings about inflation from the Fed have made investors more wary about price pressures.
This week, Fed Governor Donald Kohn said underlying U.S. inflation -- which strips out volatile food and energy prices -- had been "pretty well behaved" but that the Fed had been raising rates to maintain that status quo.
Fed Governor Mark Olson also said this week he will be watching prices closely in the coming months to see if energy prices are raising inflation risks.
While hawkish comments from the Fed have resulted in a selloff of Treasuries, the dollar has gained, since rising interest rates generally make dollar-denominated securities more attractive to foreign investors.
The dollar traded as high as ･114.94 -- its highest level in two years -- after the government reported a trade deficit that was below Wall Street's expectations.
The Commerce Department said the trade gap in August widened to $59 billion, which was slightly below the $59.5 billion gap economists surveyed by Briefing.com had forecast. The growing trade deficit has played a major role in the decline of the dollar.
But in late afternoon currency trading, the dollar gave back those gains. The dollar bought ･114.33, down slightly from ･114.37 late Wednesday, while the euro bought $1.2033, up from $1.2027 in the previous session.
Looking ahead at Friday's releases, traders are anticipating reports on inflation, retail sales and consumer confidence.
-- from staff and wire reports
For updated bond charts, click here.