Treasury yields spiked today, as bond and note prices dropped for the first time in the last 10 trading sessions. Market analysts said the action reflected an unwinding of yesterday's unusual rally, dismay over the contents of the Federal Open Market Committee minutes released late yesterday and the stock market's recent resilience.

The day's only economic release,

durable goods orders

for February, were significantly weaker than expected. That ought to have cheered the bond market, which wants economic growth to slow so that interest rates don't rise.

It didn't. The benchmark 10-year Treasury note ended down 26/32 at 102 7/32, lifting its yield 10.8 basis points to 6.195%, the highest since March 18. The 30-year bond fell 1 9/32 to 103 15/32, lifting its yield 8.9 basis points to 5.999%, the highest since Monday. And the two-year Treasury note, which is tied most closely to the interest rate set by the

Fed

, dropped 7/32 to 99 25/32, lifting its yield 12.3 basis points to 6.637%, the highest since Feb. 21.

The underperformance of the two-year note widened the yield differential between it and the 30-year bond to 63.8 basis points, the biggest since March 1989.

At the

Chicago Board of Trade

, the June

Treasury futures contract fell 1 to 95 26/32.

Over the previous two weeks, the entire Treasury spectrum save the two-year note had rallied mightily, shedding anywhere from 20 to 30 basis points of yield to reach their lowest yield levels in months.

Bouts of weakness in the stock market helped drive bond prices higher, on the rationale that falling stock prices were forecasting slower economic growth ahead. "People were trying to rationalize the price action

in Treasuries by saying, 'There must be something wrong out there,'" said Mark Mahoney, Treasury market strategist at

Warburg Dillon Read

in Stamford, Conn.

The rally stalled, Mahoney said, because

yesterday's climactic trade was deemed overdone, because the stock market got adrenalized, and because the

minutes of the Feb. 1-2 FOMC meeting, released yesterday near the end of the trading day, revealed that some committee members favored hiking the

fed funds rate

by 50 basis points instead of just 25. "Other members acknowledged that the Committee might need to move more aggressively at a later meeting should imbalances continue to build and inflation and inflation expectations clearly begin to pick up," the minutes said.

Those factors set the stage for "a pretty good reversal" in Mahoney's judgment. He sees the 10-year note yield backing up to about 6.40% next week.

"The Fed continues to tighten and most market-determined interest rates now seem to be poised to resume their upward march," concurred Robert Barbera, chief economist at

TheStreet Recommends

Hoenig & Co.

in Rye Brook, N.Y. He figures that with two more 25-basis-point rate hikes likely, the two-year note yield could easily gain 30 basis points.

Hoenig doesn't dare forecast the 30-year bond's yield, which has been driven down in large measure by the

Treasury Department's

plans to reduce the supply of long-maturity issues. "It requires

Carnac rather than an economist to figure that out," he said. "It's so unhinged from anything you can put your arms around."

Eric Cheung, manager of fixed-income at

Wilmington Trust

in Wilmington, Del., described today's action as a "coming back to reality," and predicted it will continue into next week, lifting yields by 20 to 25 basis points. "Though inflation is not a big concern at this point, growth still looks pretty brisk over the next three to six months," he said. "And with energy prices increasing, companies are eventually going to start passing their increased costs on to consumers."

Economic Indicators

Durable goods orders fell 2.3% in February, their biggest decline since a 2.4% drop in April 1999. Excluding the volatile transportation component, which fell 8.7%, orders for durables fell 0.2%. Economists polled by

Reuters

had forecast a 0.2% drop overall and a 1.4% increase excluding transportation. But the year-on-year pace of durables orders quickened in February, to 7.3% from 5.4% in January.

Currency and Commodities

The dollar fell against the yen and the euro. It lately was worth 106.96 yen, down from 107.36 yesterday. The euro was worth $0.9768, up from $0.9716. For more on currencies, please take a look at

TSC's

new

Currency Watch column.

Crude oil for May delivery at the

New York Mercantile Exchange

rose to $27.98 a barrel from $27.31.

The

Bridge Commodity Research Bureau Index

fell to 212.46 from 212.74.

Gold for April delivery at the

Comex

fell to $285.10 an ounce from $285.40.