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U.S. Treasurys debt prices rose Friday after a batch of mixed signals fanned skepticism about the strength of an economic recovery, rekindling a safety bid for bonds.
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Concerns that the the world's biggest economy could contract again hammered Wall Street, a day after the government said the United States posted its first quarterly growth in more than a year.
With the economy still fragile a year after the global credit crisis, the Federal Reserve will likely stick to its ultra-easy policy and near-zero interest rate target after policymakers convene next Tuesday and Wednesday, analysts said.
Friday's economic reports "have introduced a great deal of uncertainty. It's very unclear which report is the most important or indicative of actual growth," said Lindsey Piegza, market analyst with FTN Financial in New York. "That's why we are seeing stocks and bonds reacting the way they are."
The price of benchmark U.S. 10-year notes was last up 13/32 at 101-14/32 after gaining as much as 18/32.
Their yield, which moves inversely to price, was 3.45 percent, down from 3.50 percent late Thursday.
Major U.S. stock indices fell nearly 1 percent, a day after recording their best gains in three months.
The latest snapshots of the U.S. consumer were worrisome to traders wary of a double-dip recession. The data overshadowed encouraging readings on Midwest manufacturing, which has benefited from federal incentive programs.
A government report showed a 0.5 percent drop in personal spending and no growth in personal income in September, reinforcing the view of an anemic consumer sector that makes up nearly 70 percent of the U.S. economy.
Reuters and the University of Michigan said their index on U.S. consumer sentiment ended at 70.6 in October, lower than the 73.5 in late September.
Consumer confidence is seen as a long-term predictor of consumer spending.
Bright Spot in Midwest
While the consumer sector remains sluggish, the revival in manufacturing seemed intact, thanks to inventory rebuilding and government help.
One report showed Chicago-area factory activity moved into growth mode in October, while another survey showed the business sector in the Milwaukee region in the upper Midwest stopped contracting.
Those reports, however, were not enough to wipe out doubts over Thursday's government data showing a better-than-expected 3.5 percent increase in U.S. gross domestic product in the third quarter, analysts said.
"It's clear that the recovery is just not there. I'm looking at yesterday's GDP report with skepticism right now," said Todd Schoenberger, managing director at LandColt Trading in San Antonio, Texas.
Such a scenario would be positive for investors to own Treasurys, especially long-dated maturities, analysts said.
The 30-year bond was up 21/32 to yield 4.30 percent, down from 4.34 percent Thursday.
Shorter maturities rose on bets that the Fed holds short-term rates near zero into late 2010. Two-year notes were up 2/32 for a 0.95 percent, down from 0.98 percent late Thursday.
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