NEW YORK (CNN/Money) -
Treasury prices fell Friday, hit by end-of-week profit-taking after a key consumer sentiment report was not as weak as some dealers had suspected.
With benchmark yields already at five-month lows, economic information needs to be especially weak to generate more buying interest.
At around 3:45 p.m. ET, the benchmark 10-year note lost 13/32 of a point to 100-31/32, yielding 4.13 percent, up from 4.07 percent late Thursday, while the 30-year bond shed 1/2 of a point at 106-23/32 to yield 4.92 percent, up from late Thursday's 4.87 percent.
The two-year note lost 4/32 of a point to 99-25/32 to yield 2.50 percent, and the five-year note dipped 10/32 to 100-3/32 with a yield of 3.35 percent. Treasury prices and yields move in opposite directions.
The University of Michigan's index of consumer sentiment slipped to 95.8 in September from 95.9. The median forecast had been for an increase to 96.5 but many dealers had leaned toward a softer number.
As it is, the Michigan index has been essentially unchanged for four months and has been between 90 and 97 points for ten of the past 11 months.
"This relative stability has been remarkable given the ebbs and flows in job creation, the equity markets, the conflict in Iraq, the election campaign, interest rates and gasoline prices," Steven Wood, economist at Insight Economics, told Reuters.
All eyes are now looking to Tuesday's Federal Open Market Committee monetary policy-setting meeting.
Any shift in the Fed's post-meeting commentary from recent installments could set the tone for fixed-income markets for several weeks, dealers said.
"The statement following the meeting will be carefully scrutinized for any sign of future plans," Richard Gilhooly, fixed-income market strategist at BNP Paribas, told Reuters.
Dealers are keen to see if the Fed refers to high energy prices in its statement, as it did in August.
Crude oil futures prices ended at a three-week high on Friday on worries about a succession of storms that could damage Gulf of Mexico production facilities.
Also on Friday, the Economic Cycle Research Institute's weekly index slipped to 131.7 from 132.5. The index's annualized growth rate was steady at -0.2 percent.
"The continued weakness in a number of components of the index suggests that it's more than just high oil prices that are ailing the economy," Lakshman Achuthan, managing director of ECRI, told Reuters.
In the currency market, the U.S. dollar gained strength as dealers unwound short dollar positions. At around 3:45 p.m. ET, the euro was slightly weaker at $1.2178. The greenback also firmed against the Japanese yen, up at ¥109.95.
-- from staff and wire reports
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