Bonds rise, greenback drifts

Treasurys lifted by a sharp drop in durable goods orders, gloomy business spending plan outlook.
April 27, 2005: 9:54 AM EDT

NEW YORK (CNN/Money) - Bond prices increased Wednesday after the government said orders for durable goods fell sharply in March. The dollar was little changed.

The benchmark 10-year note gained 12/32 of a point to 98-7/32 to yield 4.22 percent, down from 4.27 late Tuesday. The 30-year bond jumped 16/32 of a point to 112-18/32 to yield 4.54, down from 4.57 on the session. Bond prices and yields move in opposite directions.
The two-year note added 3/32 to yield 3.06 percent, while the five-year note gained 7/32 to yield 3.90 percent.
New orders for durable goods posted the biggest drop since September 2002, the Commerce Department said, down 2.8 percent. The February number was also downwardly revised to a 0.2 percent decline from a 0.5 percent increase.
The report painted a gloomy picture for factory and business spending plans, given that Wall Street had expected durable goods orders to climb 0.3 percent.
The specter of economic weakness indicated to traders that inflation was not an immediate threat and that the Federal Reserve would not feel compelled to speed interest rate hikes.
Bond traders fear inflation because it erodes the value of fixed-income paying investments.
While the durable goods report supported Treasury prices, the dollar was little changed ahead of a slew of economic reports due Thursday, including the April GDP reading and the initial jobless claims report.
The euro bought $1.2969, down from $1.2980 late Wednesday, while the dollar bought¥106.97 down from ¥105.99.

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