Treasurys move slightly higher as stocks pull back

Treasury prices mostly rose Wednesday as fears about the well-being of the economy dogged investors.

Economic readings fanned some concerns that the economy is slowing. The Federal Reserve's Beige Book, which provides readings on the U.S. economy by region, described business conditions as "weak" or "soft."

The report arrived two weeks before policymakers' next meeting on Sept. 16. The central bank, which is grappling with worries about rising prices but also an uncertain economy, is expected to leave interest rates unchanged.

Traders shrugged off a Commerce Department report that showed orders for manufactured products came in better than expected. With continued concerns about both the economy and financial sector, some investors dismissed the data as outdated because it reflected activity in July.

Investors instead sought the safety of government debt not only because of the Beige Book but because of concerns about Lehman Brothers Holdings Inc. Traders were rattled after hedge fund Ospraie Management - of which Lehman owns a 20 percent stake - said it is shutting its largest fund due to significant losses in commodities.

"People are waiting for some definitive direction, either from the economic data or from the financial markets," said T.J. Marta, fixed-income analyst at RBC Capital Markets. "The problem is, the only thing definitive that one would get right now is bad news - like a major financial entity going out or hugely negative economic data. The market is enduring this waiting game."

Investors are in particular interested in the August payrolls report, which is due from the Labor Department on Friday. It could offer insights into how well consumer spending and in turn the entire economy might fare.

The benchmark 10-year Treasury note rose 8/32 to 102 14/32. Its yield fell to 3.70 percent from 3.74 percent late Tuesday, according to BGCantor Market Data. Yields move in the opposite direction from prices.

The 30-year long bond rose 17/32 to 102 29/32, while its yield fell to 4.32 percent from 4.36 percent on Tuesday.

The 2-year note fell 1/32 to 100 6/32, while its yield rose to 2.27 percent from 2.26 percent.