US Treasury debt prices rise slightly

US Treasury debt prices rose slightly on Friday as a subdued inflation reading gave investors a respite from a week of heavy selling pressure.
The market took a serious spill this week, with benchmark yields spiking to their loftiest in nearly two years after the Federal Reserve suggested its latest interest rate hike was probably not its last.
Bonds got some support on Friday from data showing the US central bank's favourite measure of inflation appeared to be under control.
But in the bigger scheme of things, signs of tighter credit conditions globally were scaring bond investors from the United States all the way to Japan.
As for the future, some were counting on strong economic data to keep the Fed raising rates a while longer.
"As long as the economic momentum remains strong, we believe they will still lean against inflation pressures with another rate hike," said Elisabeth Denison, economist at Dresdner Kleinwort Wasserstein.
That would likely leave the bond market following the central bank's cue, and could see benchmark yields break above 5 percent in coming weeks.
On Friday, 10-year notes were up just 2/32 and yielding 4.86 percent, just lower than Thursday's close but up nearly 20 basis points since the start of the week. Dealers identified 4.90 percent as the next key technical level to watch. Prices move in the opposite direction of yields.
It was tough quarter for government debt, too, with yields spiking nearly half a percentage point since the start of 2006. That was its worst quarterly performance in nearly two years.
Some analysts, however, predicted that some upcoming slippage in the economic outlook would eventually bring Treasuries back into favour.
In particular, they expect a slowdown in the housing market to have enough of an impact on consumer spending to allow policy officials to take their foot off the brakes.
The latest reading on inflation certainly favoured that argument. The core personal consumption expenditures index, closely watched by the Fed, grew only 0.1 percent in February, just as expected.
That left the year-on-year reading unchanged from January at 1.8 percent, still within the Fed's presumed comfort range of 1-2 percent.
Other data published on Friday painted a mixed picture for the industrial sector, and therefore proved inconclusive for bonds.
An index of Midwest business conditions rose much more than investors had foreseen during March. But then growth in February factory orders proved a lot more tame than economists had thought.
This left Treasuries treading water, with two-year notes up 1/32 and yielding 4.83 percent from 4.85 percent on Thursday.
Five-year notes added 2/32 to yield 4.82 percent, down from 4.83 percent on Thursday, while the 30-year bond was flat and offering a yield of 4.90 percent, level with the previous session.
Next week will bring another barrage of important figures, with everything from national manufacturing data to the closely watched jobs report due for release.