Yields bounce back from eight-month highs following Monday's inflation-fueled selloff.

March 29, 2005: 9:32 AM EST

NEW YORK (CNN/Money) - Bonds regained some ground Tuesday after inflation fears prompted a big selloff Monday that pushed yields on the 10-year note to an eight-month high.

The benchmark 10-year note climbed 9/32 of a point to 95-7/32, yielding 4.61 percent, down from 4.64 late Monday.
The 30-year bond added 16/32 of a point to 107-16/32 to yield 4.86 percent, down from 4.88 late Monday. Bond prices and yields move in opposite directions.
The five-year gained 5/32 of a point to yield 4.30 percent, while the two-year edged up one tick to yield 3.86.
Investors appeared to make slight readjustments Tuesday before a number of economic reports due this week, including the final reading on fourth-quarter gross domestic product, an inflation indicator watched by the Federal Reserve, and the all-important March jobs report, which is due Friday.
Monday traders felt these reports would signal stronger economic growth and inflation, prompting the Federal Reserve to increase interest rates at a brisker pace than it had for the last several months. The 10-year yield reached an eight-month high Tuesday, while the dollar soared to a five-month high against the yen.
Inflation hurts bonds as it erodes the value of the fixed-income investment. However, rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors.
In currency markets Tuesday, the dollar made small gains on the yen while edging down against the euro.
The dollar bought ¥107.45 early Tuesday, up from ¥107.20 late Monday. The euro bought $1.2905, up from $1.2892 late Monday.

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