Bonds rise, $ slips ahead of Fed minutes

Yield on benchmark 10-year note hits fresh 3-month low on inflation outlook; dollar
falls.
May 24, 2005: 10:21 AM EDT
NEW YORK (CNN/Money) - Bonds rose and the dollar slipped Tuesday ahead of a key
report regarding inflation and the economy.
The benchmark 10-year Treasury note rose about a quarter-point to 100-26/32 to yield 4.03 percent, down from 4.06 percent late Monday. The 30-year bond added 15/32 of a point to 115-20/32, to yield 4.36 percent, down from 4.38 the previous session. Bond prices and yields move in opposite directions.
Prices for the five-year note gained 5/32 of a point to 100-14/32, yielding 3.78 percent, and the two-year note edged up one tick to 100-2/32, yielding 3.60 percent.
The yield on the benchmark 10-year note slipped to another three-month low as investors
awaited the release of the minutes from the Federal Reserve's May policy meeting, which are expected to provide more details on how concerned the Fed is about inflation.
The Fed raised its short-term interest rate target for the eighth consecutive time earlier this month as part of the central bank's "measured" campaign to keep inflation in check. But for the Fed lately, words can speak louder than actions as statements from the central bank often impact markets by influencing expectations of the Fed's future decisions.
The minutes, which are expected to include the Fed's comments on rising energy costs, are due Tuesday afternoon.
In currency trading, the dollar eased against the yen and euro. The dollar bought ¥107.43,
down from ¥107.65 late Monday, while the euro bought $1.2603, up from $1.2580 in the
previous session.
"The market is a bit more cautious on buying the dollars ahead of the FOMC minutes and what it might say," Peter Fontaine, currency strategist at KBC in Brussels, told Reuters, referring to the Federal Open Market Committee, the Fed's policy-making arm.
"Some people may think it could be a bit dovish but the minutes are from before the latest CPI releases and could reflect a different sentiment at the time, which also was in the minds of the Fed members."
The dollar has gained nearly 7 percent against the euro this year as investors capitalize on rising rates in the United States and slow growth in Europe.
Rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors.
-- from staff and wire reports

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