U.S. government debt market prices advanced on Friday, as weaker stocks and data suggesting a sluggish economic rebound rekindled a safety bid for bonds.
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.
A business report on New York City signaled the recent revival in the factory sector, one of the bright spots in an uneven economic turnaround, may be losing steam.
These data fueled doubts over Thursday's figure that showed a better-than-expected 3.5 percent increase in U.S. gross domestic products in the third quarter, analysts and traders 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.
If this nascent growth fizzles, inflation will remain a distant threat and should prevent the Federal Reserve from raising interest rates for a longer period than previously thought. This scenario would be positive for investors to own Treasuries, especially long-dated maturities, analysts said.
The price on benchmark U.S. 10-year notes US10YT=RR, last traded up 12/32 at 101-15/32.
Their yield which moves inversely to their price was 3.45 percent, down from 3.50 percent late on Thursday.
The 30-year bond US30YT=RR was up 27/32 to yield 4.29 percent, down from 4.34 percent on Thursday.
Investors will face more economic reports on Friday, including data on Midwest manufacturing, which was boosted by the government's cash for clunkers auto program last quarter.
This will likely be a business-led recovery, not a consumer-led recovery so we are going to be watching these numbers, said Andrew Richman, fixed-income strategist at SunTrust Private Wealth Management in Palm Beach, Florida.
Reuters and University of Michigan will release their consumer sentiment readings for the end of October. Persistent high unemployment has hurt consumer confidence, a predictor of personal spending.