Treasurys buffeted by personal income and spending data; Fed official makes case for action

Treasury prices flat following economic reports

NEW YORK — Small but promising signs of economic growth weighed on Treasurys Friday, but many Treasury bonds recovered their lost ground by the afternoon.

The Commerce Department reported Friday that both personal income and spending rose in August. The 0.5 percent rise in personal income eclipsed the 0.2 percent gain in July. It was also the fastest clip for the measure in five months.

The 10-year note fell Friday morning but rebounded by the late afternoon to trade at $100.93, barely below its price Thursday. The yield was flat at 2.51 percent.

The market found support from a speech by William Dudley, president of the Federal Reserve Bank of New York. Dudley laid out an argument in support of the Fed taking more steps to avoid deflation, a widespread drop in prices, and to lower long-term interest rates. It’s widely expected that the Fed will expand its purchases of Treasury bonds to push interest rates down and encourage spending.

In other trading, the long bond maturing in 2040 slipped 62 cents to $102.81, raising the yield from 3.68 percent to 3.71 percent. Bond yields rise when their prices fall.

The two-year note added 1.87 cents to trade at $99.89. The note paid a 0.42 percent yield.

The three-month T-bill paid a 0.14 percent yield with a discount of 0.15 percent.