WASHINGTON -- Prices of Treasury securities fell across the board yesterday as a dearth of economic news and a weak dollar fueled a bearish tone that analysts said would probably continue.
Following little movement on Friday, persistent fears of higher inflation pushed the price of the long bond down 21/32 to 93 26/32, raising the yield to 8.04%, up from 7.99% on Friday. The 10-year note deteriorated 15/32 to 95 2/32 with a 7.86% yield.
On the short end, yields on three- and six-month bills rose two basis points to 5.14% and 5.69%, respectively.
"There's a lot of nervousness in the market right now," said Eric Cheung, vice president of the investment management department of the Wilmington Trust Co.
The weak dollar, which is expected to get weaker, is very important to the market currently, Cheung noted. "People expect it to get hammered," he said. "When that happens, all hell will break loose in the bond market."
James Ho, a portfolio manager at John Hancock Mutual Funds in Boston, concurred that the sagging dollar is weighing heavily on the minds of bond traders. "It's very important," he said.
The advance third-quarter gross domestic product report coming out Friday is also "spooking" the market because growth forecasts have been creeping upward in the face of stronger than expected economic news recently, Ho said.
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