Bond prices rose slightly Friday in light trading as the market shrugged off a government report showing strong economic growth and rising inflation. But long Treasury bond yields remained above 9 percent.
The Treasury's closely watched 30-year bond rose 5-32 point, or $1.56 for each $1,000 in face value. Its yield, which falls when prices rise, dipped to 9.02 percent from 9.04 percent late Thursday.The yield on the 30-year Treasury finished above 9 percent Thursday for the first time in almost a year. The yield is important since it is used to calculate some mortgage and other loan rates.
The Commerce Department said the gross national product rose 2.1 percent in the first quarter, almost double the previous quarter's rate. A price gauge tied to the GNP shot up an annual rate of 6.5 percent from the 4.5 percent for all of last year.
Both reports normally would be bad news for the bond market because inflation erodes the value of fixed-income securities such as bonds and because a healthy economy makes it less likely the Federal Reserve will act to ease interest rates.
But the figures had been expected by bond traders - in fact, some anticipated the inflation figure would be even higher, said a Chicago
After the release of the numbers, bond prices rose, then fell, then rose again. Some traders said the market appeared to be reacting to different components of the report.
"The market didn't know which way it wanted to go," Marshall said.
Bond prices had been down all week. "People have been saying it (the market) is oversold and can't go down forever," Marshall said. "But then we've got a lot of supply coming up for the quarterly refunding. That causes a lot of consternation."