Fed chairman skips any reference to inflation or rate hikes in text of testimony; greenback rises.

March 2, 2005: 10:22 AM EST

NEW YORK (CNN/Money) - Bonds bounced back from earlier losses Wednesday after text from Fed chair Alan Greenspan bypassed talk of inflation or any hints of faster rate hikes.

The dollar gained.
The benchmark 10-year note was flat at 97-25/32 to yield 4.38 percent, up from 4.37 late Tuesday. The 10-year is at its highest yield since Dec. 2, when the yield reached 4.42 percent during the session and ended the day at 4.41 in New York, according to Reuters.
The 30-year bond slipped 6/32 of a point to 109-21/32 to yield
4.72, up from 4.71 late Tuesday. Bond prices and yields move in opposite directions.
The five-year note edged up 1/32 of a point to yield 4.00 percent, while the two-year note was flat to yield 3.58 percent.
Yield on the 10-year note hit 4.40, a 2005 high, earlier in the day on speculation that Greenspan would mention inflation and indicate faster interest rate hikes.
Fed watcher Greg Valliere of the Stanford Washington Research Group said earlier this morning that Greenspan may send signals that the central bank is prepared to drop its assurance of a "measured" pace of rate hikes.
"Since he made his comments two weeks ago, we got a really bad PPI (wholesale inflation) number, and the economic numbers have come in pretty strong," he said. "I think he's setting up the markets for dropping the phrase."
In currency trading, the euro bought $1.3128 early Wednesday, down from $1.3188 late Tuesday. The dollar bought ¥104.75, up form ¥104.39 late Tuesday.

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