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Bonds dip on stocks' rise
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May 11, 2000: 3:32 p.m. ET
Stronger stocks weigh on Treasurys; dollar retreats against yen, euro dips
By Staff Writer Jill Bebar
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NEW YORK (CNNfn) - Treasury bonds ended slightly lower Thursday, but recovered from some losses earlier in the day as U.S. equities came off from their session highs.
In the currency markets, the dollar fell from two-month highs against the yen, and the British pound remained under pressure against the dollar after setting a four-year low.
Renewed strength in stocks weighed the Treasury market for much of the day, diminishing the allure of fixed income securities. The three major U.S. stock indexes rebounded from recent losses, including the Nasdaq composite index, which rose over 2 percent in late trading.
When stocks decline sharply, investors often shift money into the relative safety of fixed income securities.
 Shortly before 3 p.m. ET, the 30-year Treasury bond fell 4/32 of a point in price to 101-7/32. The yield, which moves inversely to its price, was at 6.15 percent.
The 10-year note, which is now considered by many as the market benchmark, rose 2/32 to 100-18/32, its yield falling to 6.41 percent from 6.44 percent late Wednesday.
Treasurys also moved lower in sympathy to weakness among European  bonds. International bond markets can have a significant influence on Treasurys. "They do move together in lockstep, these two markets," said Tony Crescenzi, chief market strategist at Miller, Tabak & Co.
Analysts said the drop among European bonds was due to investors' disappointment regarding comments from European Central Bank (ECB) President Wim Duisenberg, who failed to shed light about the ECB's plans to support the euro.
Some benign economic news
The latest economic news suggested consumer spending took a pause last month. U.S. retail sales fell 0.2 percent in April, the first decline in nearly two years and well below consensus forecasts of a 0.5 percent increase. Sales, excluding autos, were unchanged in April, according to the Commerce Department.
But analysts said the report does not change expectations of a rate hike from the Federal Reserve next week. With the economy in a record period of expansion, the central bank has increased short-term interest rates five times since June.
Recent robust economic reports point to continued economic strength, and many expect the Fed to hike rates by as much as a half percentage point Tuesday.
Comments from Fed Chairman Roger Ferguson had little market impact. Addressing a conference in Washington, Ferguson spoke generally about the Fed's goals, but offered no new insight into interest rate outlook.
Investors expect a market-friendly producer price report, which is slated to be released Friday. Analysts polled by Briefing.com predict that producer prices will have declined 0.3 percent in April compared with a 1 percent gain in March.
Analysts said the core rate, which excludes volatile food and energy, is the key number. There is potential for Treasurys to advance if this number is in line with expectations. Core PPI is expected to gain 0.1 percent, the same reading as the prior month.
In other economic news, U.S. jobless claims fell 7,000 to 297,000 in the week ended May 6, revealing continued tightness in the labor market.
(Click here for a look at Briefing.com's economic calendar.)
Dollar drops versus yen
The dollar retreated from two-month highs against the yen Thursday after the Japanese currency rallied against the British pound and the euro.
But analysts said the outlook for the dollar was positive. Tim Fox, currency strategist at Standard Chartered Bank, noted strength in U.S. stocks was a "marginal positive" for the U.S. currency.
 Shortly before 3 p.m. ET, the dollar traded at 108.57 yen, down from 109.44 yen Wednesday, a 0.8 percent loss in the dollar's value.
The British pound remained under pressure against the dollar after setting a four-year low at $1.4934.
Meanwhile, the euro traded within a fairly narrow range against the dollar, changing hands at 89.97 cents, down from 90.41 cents Wednesday. Analysts said ECB's decision to leave its key interest rate unchanged at 3.75 percent was no surprise.
Analysts expect the euro to adhere to its recent ranges ahead of Tuesday's Fed meeting. Last week, the single currency hit a record low at 88.45 cents 
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