Bond prices drifted lower in light dealings Monday as rises in energy and precious metals prices stirred concerns about inflation.
The Treasury's closely watched 30-year issue fell 3/8 point, or about $3.75 for every $1,000 in face value.
Its yield rose to 9.08% from 9.05% late Friday.
The bond market has been alert for signs that inflation could be accelerating as the economy continues to grow while factories are pushing toward full operating capacity. Inflation erodes the value of bonds and notes.
Gold prices edged up Monday, finishing at about $395 an ounce in New York after falling to $393.75 on Friday.
Oil prices also finished slightly higher, although down from the day's peaks, as analysts awaited developments from an Organization of Petroleum Exporting Countries price committee meeting.
The meeting was called to discuss the overproduction problem that has depressed world oil prices.
The combined increases in energy and precious metals served "as a reminder that inflation remains a problem," said William V. Sullivan Jr., director of money market research for Dean Witter Reynolds Inc.
"Against that backdrop, there is no cash coming into the bond market," he said.
In the secondary market for Treasury bonds, prices of short-term government issues were down 3/32 point, intermediate maturities fell 6/32 point and 20-year issues fell 1/2 point, according to Telerate Inc., a financial information service.
The movement of a point is equal to a change of $10 in the price of a $1,000 bond.
The Shearson Lehman Hutton daily Treasury bond index, which measures price movements on all outstanding Treasury issues with maturities of a year or longer, was down 2.01 at 1,140.47.
Moody's investment grade corporate bond index, which measures price movements on 80 corporate bonds with maturities of five years or longer, fell 0.13 to 289.78.
In secondary trading, yields on previously issued three-month Treasury bills rose 15 basis points to 7.60% and a discount rate of 7.37%. Yields on six-month bills advanced 10 basis points to 7.91% and a discount of 7.52%. Yields on one-year bills gained 11 basis points to 8.18% and a discount rate of 7.61%.
A basis point is one-hundredth of a percentage point. The yield is the annualized return on an investment in a Treasury bill. The discount is the percentage that bills are selling below the face value, which is paid at maturity.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.313%, up from 8.188% Friday.