Bonds take a breatherTreasury prices ease as investors worry about inflation; dollar mixed.NEW YORK (CNNMoney.com) -- Bonds dipped Thursday after a report showing a rise in labor costs raised worries about the threat of inflation. The dollar slipped versus the euro and strengthened against the yen.
The benchmark 10-year note fell 7/32, or 22 cents on a $1,000 note, to yield 4.60 percent, up from 4.56 late Wednesday. The 30-year bond tumbled 13/32, or $4.06 on a $1,000 note, to yield 4.72 percent, up from 4.68 the previous session. Bond prices and yields move in opposite directions. The five-year note lost 4/32 to yield 4.55 percent, while two-year note eased two ticks to yield 4.68 percent. A report issued by the Labor Department showed non-farm unit labor costs rose 3.8 percent in the third quarter, exceeding economists' median forecast for a rise of 3.4 percent. The strong inflation reading lowered expectations that the Federal Reserve may cut interest rates in the near future. "The market had come a long way and was a bit tired ... it latched on to that unit labor costs report. It was a modest fundamental reason to sell off. The market was ready to sell off," T.J. Marta, fixed-income strategist at Royal Bank of Canada Capital Markets, told Reuters. The report also said U.S. business productivity experienced zero growth in the third quarter. Signs of the softening economy sent Treasury yields to a four-week low Wednesday as traders priced in a greater chance of the Fed easing rates again soon. But investors weren't swayed by Thursday's other negative economic news, which included a smaller-than-expected gain in factory orders, a surprising jump in initial jobless claims last week, and news that many specialty and discount stores reported much weaker sales at their stores last month. The biggest economic reading of the week remains ahead as the Labor Department is set to release its October employment report on Friday. In currency trading, the euro bought $1.2777, up from $1.2755 late Wednesday. The dollar bought ¥117.13, up from ¥117.04 the previous session. -- from staff and wire reports |
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