Bonds up after personal spending data

Treasurys finished a wobbly week with a gain Friday after data showing an anemic rise in personal spending compelled investors to put money into safe assets ahead of the weekend.

The market was not surprised to hear the Commerce Department report that personal spending rose by 0.1 percent last month. Still, the rate was the weakest in nearly a year-and-a-half and confirmed fears that consumers continue to struggle with a sinking housing market and surging costs.

The fact that personal incomes rose by 0.5 percent came as a pleasant surprise, but did little to alleviate the market's broader economic concerns.

The benchmark 10-year Treasury note rose 22/32 to 100 15/32, and yielded 3.45 percent, down from 3.52 percent late Thursday, according to BGCantor Market Data. Prices and yields move in opposite directions.

Longer-term bonds attracted buying particularly because the Commerce Department's personal spending report indicated that inflation is under control. The year-over-year personal core expeditures deflator fell to 2 percent, back within the Federal Reserve's comfort zone of 1 percent to 2 percent.

Inflation can devalue long-term bonds over time, a worry that had been keeping some investors from placing their money into the 30-year bond.

"With a better-than-expected deflator, those fears have been lowered," said Tom di Galoma, head of Treasurys trading at Jefferies & Co.

The 30-year long bond rose 29/32 to 100 25/32, with a yield of 4.33 percent, down from 4.38 percent.

The 2-year note moved slightly higher by 2/32 to 100 6/32, and yielding 1.66 percent, down from 1.70 percent late Thursday.

In late trading, Treasurys drew more buyers. As of 5:30 p.m. Eastern time, the 10-year yield was at 3.44 percent, the 30-year yield was at 4.32 percent, and the 2-year yield was at 1.64 percent.

The 3-month Treasury bill had a yield of 1.35 percent, up from 1.31 percent late Thursday, and a discount rate of 1.37 percent, up from 1.28 percent.

In other economic data Friday, the University of Michigan's index on March consumer sentiment posted a decline, adding to anxiety that personal spending could weaken further. The index fell to 69.5 this month from 70.8 in February.

On Thursday, Treasurys had fallen as a better-than-expected reading on last week's jobless claims and tame demand from investment banks for the Fed's $75 billion credit auction led investors to take money out of safe government securities.

The Fed on Friday said that in April, it will auction another $100 billion to banks, which have been strapped for cash since the implosion of the mortgage market.