Treasuries gained a bit of ground on very light summer-Friday volume, adding to and confirming

Thursday's massive gains, which were triggered by

Fed Chairman

Alan Greenspan's semiannual

Humphrey-Hawkins testimony.

There was no major economic news, but large gains by the dollar against the yen and a falloff in oil prices gave the session a bullish backdrop.

The benchmark 10-year Treasury note ended up 2/32 at 103 18/32, dropping its yield 1.1 basis points to 6.002%. Shorter-term yields fell by less than a basis point. The 30-year bond gained 10/32 to 106 15/32, lowering its yield 2.1 basis points to 5.791%.

At the

Chicago Board of Trade

, the September

Treasury futures contract gained 7/32 to 98 22/32.

Volume was extremely light. Through 3 p.m. EDT, only $13.05 billion had changed hands, 36.4% less than average for a Friday over the last month, according to tracker

GovPX

.

Thursday's rally -- which chopped roughly 15 basis points off Treasury yields -- was triggered by Greenspan's acknowledgement that the economy may be in the early stages of what will prove to be a sustained slowdown, and that additional interest rate hikes may not be necessary.

While the highs of the day did draw profit-takers and short-sellers out of the woodwork, the advancement of the rally validated it,

Prudential Securities

co-head of government bond trading Bill Kirby said. "You have to be encouraged by the price action all in all," he said. "We rallied 15 basis points and haven't given any back."

But, Kirby added, for Treasury prices to continue moving up, investors need to see additional evidence of slower economic growth and low inflation. Key opportunities for that next week include the second-quarter

Employment Cost Index

(

definition |

chart |

source

) and the June

durable goods orders

(

definition |

chart |

source

) report on Thursday, and advance second-quarter

GDP

(

definition |

chart |

source

) on Friday.

That's especially true because the Treasury market is up against some pretty formidable technical barriers,

IDEAglobal.com

Treasury market analyst Josh Stiles said. Specifically, investors are unwilling to buy the 10-year note at yields below 6%. "Some big money players are saying that's enough for now," Stiles said.

"The market's made a big move on Greenspan's credibility," he added. "He's of the opinion the slowdown is for real. Now the market needs to see data corroborating what he's expecting."

Economic Indicators

In economic news, the federal government reported a

federal budget

(

definition |

chart |

source

) of $56.3 billion for June, compared with a June 1999 surplus of $53.6 billion. For the fiscal year to date, the government is running a surplus of $176.6 billion, compared to $94.3 billion through the first nine months of fiscal 1999.

Currency and Commodities

The dollar rose against the yen and fell against the euro. It lately was worth 108.92 yen, up from 107.70. The euro was worth $0.9366, up from $0.9328. For more on currencies, see

TSC's

Currencies column.

Crude oil for September delivery at the

New York Mercantile Exchange

fell to $28.55 a barrel from $29.77.

The

Bridge Commodity Research Bureau Index

fell to 222.22 from 223.37.

Gold for August delivery at the

Comex

rose to $280.50 an ounce from $280.40.