Bonds Extend Gains

U.S. Treasuries extended gains late Friday as stocks stalled near the lows. The long bond led higher while the two-year continued to lag, weighed by spreads and next week’s Federal Open Market Committee meeting. Traders reported support in week- and month-end buying as well as safe-haven plays into the weekend in lightened volumes. The week ahead has some key event risks outside of the FOMC, including income, consumption and manufacturing data, capped by the marquee employment report Friday

The 30-year closed near 3.06% after an early 3.1066% high yield/low price and a 3.09% close Thursday. The 10-year settled near 2.48% from an overnight low of 2.5285% and 2.51% close. The five-year went out near 1.94% versus 1.9905% overnight and 1.96% Thursday. The two-year closed near 1.215% against a 1.252% low and 1.225% Thursday.

The curve trade was squeezed flatter with the gap between the two- and 10-year yields narrowed to 1.27 from a close near 1.28 plus while the spread between the five- and 30-years tightened to 1.11 plus from 1.13.

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