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Treasuries Strengthen as Worries About Argentina Build

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Treasuries were lifted today, as Argentina's debt troubles prompted investors to drop that nation's paper and flee for safer securities.

U.S. government securities posted their sharpest gains at midday, but prices tapered off slightly later in the day. Lately, the two-year Treasury note gained 1/32 to 99 22/32, yielding 4.037%. Yields move inversely to prices. The 10-year benchmark note gained 11/32 to 98 6/32, lowering the yield to 5.242%, while the 30-year Treasury bond rose 18/32 to 96 2/32, yielding 5.650%.

Dealers said Treasuries, particularly the shorter maturities, climbed after rumors began circulating that Argentina's finance minister resigned in the midst of the country's ongoing financial crisis. U.S. government debt benefited as investors, opting for a safer haven, dropped Argentine debt.

The bond market has been relatively quiet this week. With little economic data to drive trading, the movement of the stock market has spurred much of the activity during the last few days. This morning's

initial jobless claims for the week ended July 7 came in weaker than expected, rising by 42,000 to a total of 445,000. The number was sharply higher than what economists were expecting. Nevertheless, according to Tony Crescenzi, chief bond market strategist at

Miller Tabak

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, the market isn't putting too much credence on the numbers as the weekly data was distorted by seasonal auto plant shutdowns.

Investors will be keeping a close watch for tomorrow's economic reports, which include the

producer price index,

retail sales for June and the latest

consumer sentiment index. "The retail sales should be important," said Avram Altaras, managing director at

Bear Stearns

. "If it comes in different from what's expected, it should be a busy day for Treasuries."