NEW YORK -- Prices for U.S. Treasury bonds were dragged down Thursday by a report that suggested the housing market was stabilizing.
At 5 p.m. EST, the 10-year Treasury note was down $2.50 per $1,000 in face value, or 8/32 point, from its level at 5 p.m. Wednesday. Its yield, which moves in the opposite direction, rose to 4.84 percent from 4.81 percent.
The 30-year bond fell 12/32. Its yield rose to 4.93 percent from 4.91 percent.
The 2-year note fell 2/32. Its yield rose to 4.96 percent from 4.92 percent.
Yields on 3-month Treasury bills were 5.12 percent as the discount rate rose 0.01 percentage point to 4.99 percent.
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The National Association of Realtors said its index for pending U.S. home sales rose 4.9 percent in December - the biggest increase in more than two years.
The data back up suspicions among investors that the housing market may already have troughed and is starting to improve. This would support the theory that growth is on an accelerating path, lessening the likelihood of a stimulative cut in interest rates by the Federal Reserve anytime soon.
Earlier Thursday, bond prices were boosted by the Institute for Supply Management's manufacturing index, which fell to 49.3 in January from 51.4 in December, reflecting a shift from expansion to contraction in the sector.
"People who bought on ISM and thought the market was going to rally are now underwater and wondering what's going on," said Scott Gewirtz, head of Treasurys trading at Lehman Brothers.
The core index - which strips out the volatile effects of food and energy prices, and is a preferred inflation gauge for central bank officials - showed an increase of just 0.1 percent in December, below the forecasts of most Street economists. The year-on-year comparison was an increase of 2.2 percent, down comfortably from the previous peak of 2.4 percent.
"That figure shouldn't give any alarm to the Fed," said Barclays Capital Treasurys strategist Michael Pond.
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