NEW YORK (CNN/Money) -
U.S. Treasury prices gained Monday on further indications of easing inflationary pressures and a stalling economic recovery, after the government reported that personal income in July rose at the slowest pace since November 2002.
The benchmark 10-year Treasury gained 3/8 of a point to 100-17/32, yielding 4.18 percent, down from 4.23 late Friday. The 30-year bond advanced 19/32 of a point to 105-23/32 to yield 4.98 percent, down from 5.03 late Friday.
The two-year note added 1/16 of a point to 99-26/32 to yield 2.46 percent, and the five-year note rose 7/32 of a point to yield 3.38 percent. Bond prices and yields move in opposite directions.
In the currency market, the euro bought $1.2015, up from $1.2011 late Friday, and the dollar bought ¥109.90, up from ¥109.65 late Friday.
Personal income edged up just 0.1 percent, well below forecasts of a 0.5 percent increase, according to analysts surveyed by Briefing.com, and less than June's 0.2 percent gain.
But personal expenditures jumped 0.8 percent, beating forecasts of 0.7 percent and signaling an economic rebound.
Even though last week's gross domestic product and consumer confidence reports slightly eased concerns that the world's biggest business engine might be stalling, investors are still uncertain about the strength of the U.S. recovery. The morning's weak data will not clarify the economic picture for investors.
Traders await key economic data due this week to shed light on the situation, particularly Friday's payrolls report, since the past two months have been disappointing in terms of job creation.
Some analysts believe August jobs figures could be a crucial factor in determining whether the Federal Reserve raises interest rates in September for the third time since June. An interest-rate hike would pressure bonds, since higher rates erode the value of fixed-return Treasurys. But it would make U.S. investments more attractive to overseas investors, strengthening the greenback against the euro and the yen.
The U.S. generated just 78,000 new jobs in June and 32,000 in July, well below the level believed necessary to generate a self-sustaining recovery.
Ahead of the jobs report, the consumer confidence index will be released Tuesday, and a manufacturing report from the Institute of Supply Management will be released Wednesday.
"There is a very heavy U.S. data calendar this week, but the employment report will be the biggest release," Phillippe Mayer, foreign exchange strategist at Société Générale in Paris, told Reuters.
-- from staff and wire reports
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