August 5, 2004

NEW YORK (CNN/Money) - U.S. bond prices inched higher after Treasury Secretary John Snow warned that soaring oil prices pose a threat to the economy.

The benchmark 10-year bond rose 5/32 to 102-23/32 to yield 4.40 percent, down from 4.42 percent late Wednesday, and the 30-year bond added 3/16 of a point to 103-5/32 to yield 5.15 percent, down from Wednesday's late rate of 5.16 percent.

The two-year note added 1/32 to 100-7/32 to yield 2.62 percent and the five-year note rose 1/8 of a point to 100-1/32 to 3.61 percent.

In an interview on local radio station WAKR, Snow singled out energy prices as a special concern that stands out among other signs of a generally sustained recovery, like high levels of home ownership and an improving jobs market.

"These extraordinarily high energy prices are a negative," Snow said. "They're hurting the recovery and they're extremely unwelcome and it's time ... for the Senate to go back to work and pass the president's energy bill."

Snow also acknowledged that economic growth "slowed somewhat" in June but said "the evidence indicates there's still a very strong growth in the United States" that should last.

On the economic front, the Labor Department reported that initial jobless claims fell by 11,000 to 336,000 in the week ended July 31, below forecasts for 340,000, according to Briefing.com.

The government will issue a report on July's unemployment rate and payrolls Friday, a report which could influence bonds and the Fed's decision on interest rates when it meets August 10.

In the currency market, the dollar rose slightly against the euro and the yen. The euro bought $1.2035, down from $1.2043 late Wednesday, and the dollar bought ¥111.51, up from ¥111.20 late Wednesday.

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