* U.S. consumer spending, price data supportive for bonds
* Safe-haven U.S. debt held before 3-day weekend,
* Pre-weekend short-covering cited
By Ellen Freilich
NEW YORK, Aug 30 U.S. Treasuries prices rose
slightly on Friday, supported by subdued data on U.S. consumer
spending and inflation and by geo-political risk before a
Underlying concern about a possible military strike against
Syria made it unlikely that investors would want to be short
safe-haven U.S. debt, particularly over a long weekend, traders
U.S. financial markets will be closed on Monday for the
Labor Day holiday.
"There's short-covering before a long weekend," said Thomas
di Galoma, a head of bond trading at ED&F Man Capital Markets in
The Commerce Department reported that U.S. consumer spending
rose just 0.1 percent and inflation was tame in July. Economists
had estimated consumer spending rose 0.3 percent last month.
The data on the first month of the third quarter provided a
cautionary note on the economy as the Federal Reserve weighs
cutting back its massive bond-buying program.
Excluding food and energy, the price index for consumer
spending rose just 0.1 percent, leaving core prices up 1.2
percent from a year ago, below the Fed's 2 percent target.
Though such figures would seem to argue against the U.S.
central bank's trimming the $85 billion in bond purchases it is
making each month to keep interest rates low, many economists
believe the Fed will announce small cuts to its bond-buying
program at its Sept. 17-18 policy meeting.
Month-end portfolio rebalancing was also supportive for
bonds. Portfolios managed against benchmark indexes often buy
longer-dated Treasuries around month-end.
Worries that Western forces could soon launch a military
strike against Syria in response to chemical attack by that
nation's government have fueled safe-haven bids for Treasuries
The benchmark 10-year Treasury note was up 1/32
in price, its yield easing to 2.76 percent from 2.766 percent
late on Thursday. The 30-year Treasury bond was up
5/32 in price. Its yield eased to 3.71 percent from 3.718
percent late on Thursday.
The timing of the Fed's so-called taper has become a central
question for markets, with Treasury yields shooting up more than
100 basis points in recent months as analysts have increasingly
seen that date approaching.
But with data on the U.S. economy still often mixed,
investors have been reluctant to push yields to much higher
Focus has now shifted to August nonfarm payrolls data, due
Sept. 6. Those will be the last nonfarm payrolls released before
the Fed's next meeting.