Treasuries lost a smidgen of ground today on light volume and little news, as the bond market rested up ahead of two key economic releases due out later in the week -- the Purchasing Managers' Index and the employment report, both for July.

The benchmark 10-year Treasury note was down 1/32 at 103 10/32 in late trading, lifting its yield a basis point to 6.040%. Shorter-maturity yields rose by 1-3 basis points, and the 30-year bond gained 1/32, trimming its yield fractionally to 5.783%.

At the

Chicago Board of Trade

, the September

Treasury futures contract fell 3/32 to 98 19/32.

"It's amazingly quiet," said Bill Hornbarger, bond market analyst at

A.G. Edwards

in St. Louis. "Everybody is kind of waiting on the data tomorrow and Friday." Tomorrow brings the Purchasing Managers' Index; Friday the employment report.

In the only market-moving news of the day, an index measuring prices paid by Chicago-based manufacturers for raw materials experienced a sharp rise. The prices-paid sub-index of the

Chicago Purchasing Managers' Index

(

definition |

chart ) climbed to 70 from 63.6. That's below its March peak but still fans concerns about accelerating inflation, even in conjunction with slower economic growth. As a result, bond prices fell in response. "There was a flurry of activity on the data, especially the price data," said Astrid Adolfson, financial economist at

MCM Moneywatch

.

The Chicago PMI itself fell more than expected, to 52 in July from 56.8 in June.

Bond traders are looking to the national PMI and employment report to settle the question of whether the

Fed will hike interest rates again at its next meeting on Aug. 22.

In his

Humphrey-Hawkins

testimony two weeks ago, Fed Chairman

Alan Greenspan expressed willingness to give the economy the benefit of the doubt about whether a slowdown is underway -- provided that economic data continued to paint a nonthreatening picture. Since then, however, a variety of reports have surprised on the upside -- more than have surprised on the downside. Specifically, the July

Consumer Confidence Index

(

definition |

chart |

source

), June

existing home sales

(

definition |

chart |

source

) and

durable goods orders

(

definition |

chart |

source

) and advance second-quarter

GDP

(

definition |

chart |

source

).

At the

Chicago Board of Trade

today,

fed funds futures discounted 40% odds of an Aug. 22 rate hike, up from 36% on Friday.

Economic Indicators

In other economic news, the

APICS Business Outlook Index

(

definition |

chart |

source

) rose to 46.4 in July from 44.0 in June.

Currency and Commodities

The dollar fell against the yen and the euro. It lately was worth 109.36 yen, down from 109.47. The euro was worth $0.9265, up from $0.9230. For more on currencies, see

TSC's

Currencies column.

Crude oil for September delivery at the

New York Mercantile Exchange

fell to $27.43 a barrel from $28.18.

The

Bridge Commodity Research Bureau Index

fell to 218.61 from 219.59.

Gold for December delivery at the

Comex

fell to $283.20 an ounce from $284.20.