CNNMoney - July 7, 2008: 12:47 PM EDT

Government bonds gain some momentum as oil prices fall and the dollar strengthens, investors still concerned about economic data.

By David Goldman, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) — Bond prices were higher Monday as crude oil fell nearly $5 and the dollar rebounded slightly. But the day’s good news didn’t put to ease investors’ fears about the health of the economy.

The benchmark 10-year note rose 6/32 to 99 10/32 to yield 3.95%, down from 3.97% late Thursday. Bond prices and yields move in opposite directions.

The 30-year long bond rose 7/32 to 97 21/32. Its yield fell to 4.51% from 4.52% in the previous session. The 2-year note gained 26/32 to 100 28/32, while its yield declined to 2.41% from 2.52% late Thursday.

“There’s some focus on energy, and the dollar has helped a little bit, but otherwise it’s a very quiet session,” said Commonfund chief economist Michael Strauss. “Investors’ positive sentiment is from weakness in Friday’s employment report and generally negative economic data from last week.”

The bond market closed at 1 p.m. ET last Thursday remained closed Friday in observance of the July 4th holiday.

Oil prices retreated from their all-time high as the dollar strengthened in some markets. Crude for August delivery fell nearly $5 a barrel in early trade on the New York Mercantile Exchange.

The oil market responded to reports out over the weekend that Iranian officials have agreed to renew talks with the EU over the country’s nuclear program and the enrichment of uranium.

Friday, the Labor Department reported a net loss of 62,000 jobs in June. That matched the job loss figure for May, which was revised higher from 49,000. The unemployment rate held steady at 5.5%

Investors often flock to the security of government-backed bonds when the economic climate is uncertain. Conversely, demand for bonds usually falls when the economy shows signs of improvement and investors are encouraged to seek out greater returns in the stock market.

source: CNNMoney

This entry was posted on Tuesday, July 8th, 2008 at 6:54 am and is filed under Business News, Stock Investment, US Recession. You can follow any responses to this entry through the RSS 2.0 feed. Both comments and pings are currently closed.