Bond Brief: Yields Spike Again

Updated from 11:21 a.m. EST

The Treasury market unraveled Thursday, beaten up by government reports showing a drop in jobless claims and an increase in one of the Federal Reserve's most closely watched inflation measures, as traders got cautious ahead of Friday's personal income and spending reports.

Wall Street economists expect that personal income rose by 0.5% in February, and that personal spending edged higher by 0.1%. Two manufacturing reports are also to be released Friday, with February factory orders expected to rise by 1.3% and the March Chicago Purchasing Manufacturers Index to come in at 58.0, up from 57.0 in the previous month.

"There are more legs to this economy than most people realize," says Steve Bohlin, a portfolio manager with Thornburg Investment Management. "The Fed has been removing accommodation, and so far they really haven't been restrictive: The Fed hasn't slowed down the economy yet." ...