Treasuries Extend Recent Upward Trend

Treasuries moved higher over the course of the trading day on Friday, extending the upward trend seen over the past several sessions.

Bond prices initially showed a lack of direction but climbed firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 3.9 basis points to 2.642 percent.

With the continued decrease on the day, the ten-year yield ended the session at its lowest closing level since early April.

Treasuries continued to benefit from Thursday’s Commerce Department report showing a continued contraction in U.S. economic activity in the second quarter of 2022.

The Commerce Department said real gross domestic product decreased by 0.9 percent in the second quarter after slumping by 1.6 percent in the first quarter. Economists had expected GDP to increase by 0.5 percent.

With GDP unexpectedly declining for the second consecutive quarter, the data signals the U.S. economy is in a technical recession.

However, economists cast doubt on whether the economy is actually in a recession, citing other indicators showing continued growth and persistent strength in the labor market.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing an acceleration in the pace of consumer price growth.

The report showed the annual rate of growth by the personal consumption expenditures price index accelerated to 6.8 percent in June from 6.3 percent in May, showing the fastest growth since January 1982.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also accelerated to 4.8 percent in June from 4.7 percent in May.

The inflation data, which is said to be preferred by the Federal Reserve, was included in a report showing personal income increased by slightly more than expected in the month of June.

Monthly jobs data is likely to be in focus next week, while traders are also likely to keep an eye on reports on manufacturing and service sector activity and the U.S. trade deficit.

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