Los Angeles Times - latimes.com

Los Angeles Times - latimes.com: "From the Los Angeles Times: September 21, 2007 MARKETS Fed's move called into question Rising bond yields and a slumping dollar fuel inflation worries after the rate cut. By Walter Hamilton, Los Angeles Times Staff Writer NEW YORK — Yields on long-term Treasury bonds jumped, the U.S. dollar sank and the price of gold surged Thursday, intensifying questions about whether the Federal Reserve's move this week to stimulate the economy could backfire. Though the central bank's cut in short-term interest rates on Tuesday stoked the stock market, it has spooked some other markets -- mainly by raising fears of higher inflation that could undermine the economy. Those concerns were in focus Thursday in the Treasury bond market, where long-term yields rose for a third day. The annualized yield on the 10-year Treasury note, a benchmark for mortgages, surged to 4.70% from 4.54% on Wednesday and 4.47% on Tuesday. A major fear is that higher long-term borrowing costs, particularly in the mortgage market, could damp the positive effects the rate cut was expected to have. 'The markets certainly are testing Mr. Bernanke,' said Tom Di Galoma, head of Treasuries trading at brokerage Jefferies & Co. in New York, referring to Fed Chairman Ben S. Bernanke. After two days of higher prices, the stock market on Thursday gave back some of it"