US Treasury prices finish firmer

US Treasuries crept up in thin trade on Friday as security fears ahead of the weekend and shoddy stock market performance fuelled a modest safe-haven bid.
"People are just trying to cover up shorts before the weekend ahead of the Democratic National Convention," said Michael Franzese, head of the Treasury trading department at Zion's Bank Capital Markets.
The FBI said on Friday it was investigating "unconfirmed information" of a possible attack on media vehicles during the convention, which begins in Boston on Monday.
The benchmark 10-year note was up 4/32 in price for a yield of 4.43 percent.
That compared with 4.45 percent on Thursday but was still well below highs of 4.88 percent hit last month, when a raft of weak economic figures suggested the Fed might slow the pace of monetary tightening.
Yields climbed 10 basis points on the week to reflect the policy implications of Federal Reserve Chairman Alan Greenspan's upbeat views on the economy.
"For his testimony, Chairman Greenspan donned his Goldilocks outfit, arguing for robust growth, low inflation and a measured Fed," quipped Ethan Harris, senior economist at Lehman Brothers.
Echoing Greenspan, Chicago Fed President Michael Moskow said the economy was doing just fine and that recent softness in the data was likely a temporary blip.
He warned the Fed would get more aggressive on rates if the economy looked like overheating and called last month's hike a step toward getting policy back to neutral, a level that neither stimulates nor retards growth.
Taking the Fed's economic optimism to heart, the futures market has priced in a quarter-point rate hike at each of the remaining four policy meetings this year, a program that will lift fed funds to 2.25 percent in time for Christmas.
Resigned to such forecasts, two-year yields were stuck at 2.65 percent, some 142 basis points above the current 1.25 percent funds rate.
The five-year note gained 2/32 for a yield of 3.67 percent, from 3.68 percent.
At the long end, 30-year bonds added 6/32, leaving yields at 5.17.
The yield curve flattened some more, with the spread between two- and 10-year yields having contracted by seven basis points on the week to 178 basis points, its lowest reading since October 2002.