Bond prices finished slightly lower Monday as traders speculated that the Federal Reserve won't relax its credit policy in the near future.
The Treasury's closely watched 30-year bond declined 1/4 point, or $2.50 for every $1,000 in face value. Its yield, which rises when prices fall, advanced to 7.95% from 7.93% late Friday.
Bond prices started the day lower as traders continued to react to new unemployment data and uncertainty about coming Treasury auctions hung over the market. But the fall in bond prices was halted later in the day by a steep decline in the stock market, analysts said.
They described the decline in bond prices as a continuation of Friday's retreat, which was triggered by a government report showing surprisingly strong job growth in October.
Adding to the market's nervousness was Monday's announcement by the Treasury that it is postponing its weekly auction of three- and six-month bills because Congress hasn't raised the debt ceiling. The Treasury bill sales normally are held every Monday.
A quarterly auction planned by the Treasury of about $30 billion in government securities, set to begin today, also could be put off if Congress doesn't enact a higher debt limit.
The bond price decline was reversed as stock prices tumbled, with the Dow Jones index of 30 industrials falling 47.34 points to 2,582.17. Many investors tend to gravitate toward government securities as a safe-haven investment in times of stock market jitters.
"The (bond) decline seemed to stop when the stock market took a hit," said Mitchell Held, chief financial economist at Smith Barney, Harris Upham & Co.
In the secondary market for Treasury securities, prices of short-term government issues slipped 1/32 point to 3/32 point; intermediate maturities were down 1/32 point to 1/16 point, and long-term issues declined 1/4 point, according to figures provided by Telerate Inc., a financial information service.
The movement of a point is equivalent to a change of $10 in the price of a bond with a $1,000 face value.
The federal funds rate, the interest on overnight loans between banks, was quoted late in the day at 8.866%, unchanged from late Friday.
The dollar ended higher against most key currencies in quiet, uninspired trading.
Currency traders said technical factors within the market, fueled by continued firmness in U.S. interest rates, were largely responsible for the dollar's rise in New York.
Overseas, trading was also described as featureless.
In Tokyo, where trading ends before Europe's business day begins, the dollar closed at 143.45 yen, down 0.30 yen from Thursday. Japanese markets were closed Friday for a national holiday. The dollar rose to 143.55 yen in London, and to 143.85 yen in New York, up from 143.25 yen Friday.
The dollar fell against the pound. Sterling rose in London to $1.5795 from $1.5705 late Friday, and in New York to $1.5767 from $1.5685.
Precious metal futures prices rose on New York's Commodity Exchange as traders reacted to the decline in prices on the New York Stock Exchange.
On other markets, grain and soybean futures were mixed, sugar was lower, energy futures were mixed, copper prices fell and livestock and pork futures were higher.
Gold futures settled $2.80 to $3.10 higher, with the contract for delivery in November at $381.50 an ounce; silver was 0.8 cent to 1.2 cents higher, with November at $5.238 an ounce.
There was some profit taking early in gold trading on signs the strength the metal showed last week was weakening, said Don Tierney, an analyst with Stanley Bell & Co. in New York.