Treasury prices were higher Friday as wary investors once more elected to play it safe by buying government bonds and selling stocks.
There was no overriding concern spurring risk-fearing investors toward the safety of government assets. But a complex and varied set of problems in the financial markets and in international relations made Treasurys once more seem the safest option.
"People just want to be in Treasurys over the weekend because there will be no trade for two days and people don't know what will happen," said Kim Rupert, director of fixed income at Action Economics.
Factors fueling the flight from risk included recent worrisome economic data, tightness in other debt markets, escalating tensions between Turkey and Iraq and violence that accompanied independence for Kosovo this week, she said.
However, remarks by Dallas Federal Reserve President Richard Fisher reinforced the bond market's worries about inflation. Fisher told a Texas audience he is hearing more concern about price pressures, according to news reports.
Fisher is a member of the policy-setting Federal Open Market Committee and voted against the decision to cut rates one-half a percentage point on Jan. 30, citing inflation concerns at the time.
The Fed committee will have another meeting March 18. But Action Economics noted that even if Fisher again opposes a rate cut, the rest of the committee is likely to put one in place.
The benchmark 10-year Treasury note rose 6/32 to 97 27/32 with a yield of 3.76 percent, down from 3.78 percent late Thursday, according to BGCantor Market Data. Prices and yields move in opposite directions.
The 30-year long bond gained 2/32 to 97 7/32 with a yield of 4.55 percent, down from 4.56 percent late Thursday.
The 2-year note rose 2/32 to 100 10/32 with a 1.96 percent yield, down from 1.99 percent late Thursday.
Other parts of the debt market were shaky on Friday. For the past six months, the Treasury market has benefited from nervousness about the possible risks of other assets, such as subprime mortgages.
Municipal auction rate securities have been an unexpected casualty. This usually reliable market features weekly and monthly resets on rates of securities. In normal times it keeps a variety of public institutions supplied with short-term operating funds. But since the start of the month hundreds of municipal auction rate sales have failed.
Even investment grade corporate bonds have been under pressure this week. This week has seen about $2 billion in issuance, which is low by historical standards. In normal times there is steady demand among mutual funds and pension plans for high-quality corporate debt.
There was some soothing news Friday on inflation, which is closely watched by the bond market because it eats into fixed income. The Bureau of Labor Statistics revised its December producer price headline figure to show a 0.3 decline. Previously it had reported producer prices fell just 0.1 percent that month.
The November headline figure was reduced to a gain of 2.6 percent from a prior estimate of a 3.2 percent rise. The revisions were not followed closely in the Treasury market or on Wall Street.