Business life: My finance news blog

Treasury prices were lifted Tuesday as investors pulled back on the previous day’s gains on Wall Street, spurring demand for perceived safe haven assets.

"Bonds are trading on some weakness in the equity market today," said Bill Larkin, portfolio manager at Cabot Money Management.

Stocks fell from their highest level in 13 months on Tuesday as investors reacted to a stronger dollar. The greenback, which is also perceived as a safer investment, rebounded from 15-month lows Tuesday.

Going forward, Larkin said prices of longer-dated treasuries will turn lower and prices for short term bonds will rise as the Federal Reserve holds interest rates near zero.

"That market will start to anticipate higher future inflation," Larkin said. "Because the Fed is on the sidelines, there is more embedded risk that inflation will become a problem for longer-dated securities."

Investors are keeping a close eye on the Fed for any indication of when it will raise interest rates loan till payday.

"The Fed’s change from the current liquidity to tightening monetary policy and raising interest rates without choking the economic growth will be just as challenging as it was getting the economy going again," he said. "And the market will be focus on that change."

Bond prices. The benchmark 10-year note was up 3/32 to 10-14/32, and its yield fell to 3.33% from 3.34% late Monday. Bond prices and yields move in opposite directions.

The 30-year bond rose 17/32 to 102-6/32, and its yield eased to 4.25%.

The 2-year note edged higher to 100-15/32. Its yield fell to .77%.

The yield on the 3-month bill .07% 

Source