A rise in oil prices unsettled the government securities market on Monday.
In late trading, the yield on the 30-year Treasury bond was at 6.54%, up from 6.53% on Friday. Ten-year notes rose 1 basis point in yield to 5.69%. Two-year notes increased 4 basis points to 3.99%.
The Organization of Petroleum Exporting Countries said it will hold an emergency meeting at the end of this month. The cartel then is expected to increase oil prices.
Below $16 a Barrel
Until that announcement, the price of oil had fallen below $16 -- the lowest level since the Persian Gulf War -- in anticipation that the United Nations will temporarily lift the embargo on Iraqi oil sales.
On Monday, the price of oil surged to $17.36 a barrel.
An increase in commodity prices also fed the selloff in the Treasury market.
The Commodity Research Bureau index, measuring 21 futures prices, rose 2.83 points, or 1.3%, to 218.01.
Soybean Prices Rise
The rise was attributed mainly to higher soybean prices, spurred by flooding in the Midwest.
The bond market is today expected to focus on the first part of Federal Reserve Board Chairman Alan Greenspan's semiannual Humphrey-Hawkins testimony to Congress.
Also today, the government is scheduled to report on June housing starts. Economists estimated that housing starts were flat in June, after a 2% rise in May and an 8% increase in April.
Interest rates fell at the Treasury's weekly bill auction, at which $24.4 billion in securities were sold. Three-month bills were auctioned at an average discount rate of 3.05% and six-month bills at 3.15%. Both rates were down 1 basis point.
In foreign exchange trading, the dollar rose to 108.40 yen from 107.55, benefiting from uncertainty about Sunday's election in Japan.
The Dow Jones industrial average rose 6.99 points to 3,535.28.