Treasury bonds rose on Monday, and yields dropped as investors looked to lock in gains from last week's strong stock market showing.
Bluechip stocks of the Dow Industrial Average fell 61 points after as continuing credit market worries involving possible mortgage market losses by Germanyâ€™s largest bank and an unexpected strike for GM workers raised worries about the economy.
The 10-year Treasury bond rose 1/32 at 101/32, with a yield of 4.620 percent. Meanwhile the 2-year note was steady at 99 29/32, yielding 4.058 percent. The 30-year long bond rose 8/32 to 102, with a yield of 4.872 percent.
Bond investors may still have some concerns about last weekâ€™s move by the Federal Reserve to lower interest rates in a move to boost the economy. However the half point drop to 4.75 percent for the Fed Funds rate also stoked some concern about rising inflation.
Monday, Federal Reserve president Richard Fisher explained that the rate cut was made possible by slowing inflation and added that the Fed would continue to monitor economic data, with the possibility of further adjustments if necessary.
Other factors affecting bonds are the depreciation of the dollar, which has fallen to record lows versus various currencies, including all time lows versus the euro. A weaker dollar could damage the prospects for longer-maturity securities.