Treasury prices rose Friday after a report showed that inflation remains in check.
The Commerce Department reported Friday that the economy expanded at an annual rate of 2 percent in the third quarter, matching what economists expected. But the same report showed that a gauge of prices excluding food and energy rose just 0.8 percent, the second lowest reading since 1962.
The bond market reads weak inflation as reassurance that the Federal Reserve will launch a large scale bond-buying effort to give the economy a boost. The Fed is expected to announce the details after its meeting Nov. 3. Traders are betting on a plan around $500 billion, with $100 billion rolled out each month.
"There's so much going on right now with elections and payroll data coming next week," said Tom Porcelli, U.S. market economist at the Royal Bank of Canada. "But no one I have spoken to today has talked about anything other than the Fed."
All types of Treasurys rose. The 30-year long bond jumped $1.06, pushing its yield down to 3.98 percent from 4.05 percent late Thursday.
The 10-year note gained 46.8 cents. Its yield fell to 2.60 percent from 2.66 percent. The yield on the two-year note slipped to 0.34 percent from 0.37 percent.
In the Treasury bill market, the three-month T-bill paid a 0.11 percent yield at a discount of 0.12 percent.