Treasury prices rise as crude oil dips further

Treasury prices extended their gains Friday as oil prices dipped and economic data suggested that the U.S. economy remains sluggish.

Oil's drop has signaled to many investors that inflation pressures might be lifting soon. Crude oil, down significantly from its July record above $147 a barrel, slid below $112 a barrel on Friday on the New York Mercantile Exchange. Inflation devalues bonds, particularly long-term bonds, over time.

And meanwhile, some weak economic data drew some money out of stocks and into Treasurys.

The Federal Reserve said industrial production rose 0.2 percent in July — better than the average analyst estimate, but still down from 0.4 percent in June. And the University of Michigan reported a more anemic uptick in August consumer sentiment than the market anticipated.

Not all the economic data on Friday was poor — the New York Fed said regional manufacturing has been expanding, to investors' surprise, in August.

But with trading volumes light ahead of the weekend and worries about the credit markets persisting, many investors decided to play it safe.

In late trading, the 10-year Treasury note extended Thursday's rise, rising 14/32 to 101 10/32. Its yield fell to 3.84 percent from 3.90 late Thursday, according to BGCantor Market Data. Yields move in the opposite direction from prices.

The 30-year long bond rose 1 to 100 16/32. Its yield fell to 4.47 percent from 4.53 percent late Thursday.

The 2-year note rose 3/32 to 100 22/32, and yielded 2.39 percent, down from 2.44 percent.

The 3-month Treasury bill's yield rose to 1.85 percent from 1.83 late Thursday, and its discount rate rose to 1.83 percent from 1.81 percent.

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