On balance, data was solid, with an 0.3% gain in personal income and an 1.6 point upward revision of final U. Michigan sentiment to 92.4. Chicago PMI came in slightly lower than expected at 58.2, though the employment component gained sharply.
The September bond closed down 4/32 at 102-25, while the two-year note and 30-year bond spread first narrowed to +265 basis points, then widened back out to +270 basis points near Thursday's close. The dollar index rebounded above 106 from two-year lows of 105.40 after the Fed and ECB intervened on the BoJ's behalf to buy dollars and euros against the yen. A Midwest bank continued to roll up its 10-year strikes, selling 10,000 September 108 calls for 10,000 December 110 calls over the course of the session.