TREASURIES-Bonds jump as mixed data fuels recovery doubts

Fri Oct 30, 2009 11:29am EDT
 
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* Mixed data fuels doubts over vigor of economic rebound

* Personal spending falls in Sept, income stalls

* Midwest business activity perks up, New York City flags

* Weaker stocks kindle some bond bids at month-end (Updates market action, adds quote)

By Richard Leong

NEW YORK, Oct 30 (Reuters) - U.S. Treasuries debt prices rose on Friday after a batch of mixed signals fanned skepticism about the strength of an economic recovery, rekindling a safety bid for bonds.

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 US10YT=RR 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 on Thursday.

Major U.S. stock indices .DJI .SPX .IXIC fell nearly 1 percent, a day after recording their best gains in three months. See [.N]

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. For more, see [ID:nNYS007488]

Consumer confidence is seen as a long-term predictor of consumer spending.  Continued...

 

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