Treasuries Finish Another Lackluster Session Slightly Lower

Treasuries turned in another lackluster performance during trading on Friday before eventually ending the day slightly lower.

Bond prices spent much of the day lingering near the unchanged line but moved to the downside going into the close. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 0.694 percent.

The modestly lower close by treasuries came following the release of a report from the University of Michigan showing a much bigger than expected improvement in consumer sentiment in the month of September.

The preliminary report said the consumer sentiment index climbed to 78.9 in September from 74.1 in August. Economists had expected the index to show a much more modest uptick to 75.0.

The index reached its highest level since March but is still well below the pre-pandemic reading of 101.0 seen in February.

A separate report released by the Conference Board showed a continued increase by its reading on leading U.S. economic indicators in the month of August, although the pace of growth slowed compared to recent months.

The Conference Board said its leading economic index jumped by 1.2 percent in August after surging up by 2.0 percent in July and spiking by 3.1 percent in June. Economists had expected the index to increase by 1.3 percent.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the slowdown in the pace of improvement “suggests that this summer’s economic rebound may be losing steam heading into the final stretch of 2020.”

Trading activity remained somewhat subdued, however, as traders continued to digest the Federal Reserve’s plan to leave interest rates at near-zero levels for years to come.

Congressional testimony by Fed Chair Jerome Powell may attract attention next week along with reports on new and existing home sales and durable goods orders.

Bond traders are also likely to keep an eye on the results of the Treasury Department’s auctions of two-year, five-year and seven-year notes.

Source: Read Full Article