Interest rates were steady to higher on Thursday as bond investors took profits after the previous day's rally.
In late trading, the yield on the 30-year Treasury bond was unchanged at 6.56%. But 10-year notes were 1 basis point higher at 5.70%, and two-year notes were 2 basis points higher at 3.97%.
Government securities rallied on Wednesday after two straight days of good news on inflation.
Rate Decline Foreseen
John Canavan, market analyst for Stone & McCarthy Research Associates, a bond consultancy in Princelon, N.J., thinks the 30-year bond may fall to 6.50% by the end of next week.
"If we get support from municipal defeasance programs and money leaving the mortgage securities market, there can be a decent enough bid to get to 6.50%," he said.
In defeasance programs, municipalities buy Treasuries to back future bond refundings. These programs and money fleeing prepayments in the mortgage securities market have boosted Treasuries recently.
Mr. Canavan added, however, that a recent Stone & McCarthy survey found that fixed-income money managers are low on cash at present, raising questions about how much money is available for buying Treasuries.
Stocks were mixed. The Dow Jones industrial average rose 8.38 to 3,550.93, but the Standard & Poor's 500 index lost 0.86 to 449.22.
The dollar gained after Germany's Bundesbank left rates unchanged. The currency finished at 1.7245 marks, up from 1.7150.