Bond prices close before Labor Day weekend with minor losses

Treasury prices closed with minor losses Friday after investors largely spent the session parsing comments from Federal Reserve Chairman Ben Bernanke and finding some signals that the central bank will cut rates if necessary to pacify markets.

Ahead of the three-day holiday weekend, investors also adjusted their positions, which tends to leave prices near the flat line.

Benchmark 10-year Treasury notes fell 5/32, or 1.56 cents on a $1,000 note, sending the yield to 4.53 percent from 4.51 percent late Thursday. Bond yields move inversely to prices.

The 30-year note lost 3/32, or 94 cents on a $1,000 note, yielding 4.82 percent, from 4.83 Thursday.

Two-year notes lost 2/32, pushing the yield up to 4.14 percent and the five-year note fell 6/32 to yield 4.25 percent.

Earlier in the session, Treasurys fell harder and their yields rose more as a comeback in global equities markets siphoned money away from bonds. The bond market closed one hour early for the Labor Day holiday.

Appearing at an annual Fed conference in Jackson Hole, Wyo., Bernanke said the central bank must take financial market disruptions into account in setting policy and will take action to ease the recent turmoil, if necessary.

The Fed "stands ready to take additional steps" to boost liquidity and "will act as needed to limit the adverse effects on the broader economy that may arise from the disruptions in financial markets," he said.

The remarks were viewed by some investors as implying that the Fed is getting ready to cut rates at its September meeting.

Traders are hoping for a rate cut, which could give investors a boost of confidence and help restore calm to stock markets. But there are concerns the Fed will keep its focus on containing inflation and not bail out investors.

In currency trading, the dollar bought ¥115.81, down from ¥115.91 Thursday, while the euro bought $1.3625, down slightly from $1.3637 Thursday.

--staff and wire reports