Treasuries Pull Back Off Best Levels But Close Modestly Higher

(RTTNews) - Following the significant rebound seen in the previous session, treasuries showed a modest move to the upside during trading on Friday.

Bond prices gave back ground after an early advance but managed to remain in positive territory. As a result, the yield on the benchmark ten-year notes, which moves opposite of its price, edged down 1.4 basis points to 4.441 percent.

The ten-year yield added to the 7.3 basis point slump seen during Thursday's session, pulling back further off Wednesday's nearly three-month closing high.

Treasuries initially benefitted from their appeal as a safe haven following the release of preliminary data from the University of Michigan showing consumer sentiment in the U.S. has unexpectedly continued to deteriorate in the month of May.

The University of Michigan said its consumer sentiment index dipped to 50.8 in May after slumping to 52.2 in April. Economists had expected the index to inch up to 53.4.

With the unexpected decrease, the consumer sentiment index has fallen to its lowest level since hitting 50.0 in June 2022.

However, the report also said year-ahead inflation expectations surged to 7.3 percent in May from 6.5 percent in April,

Year-ahead inflation expectations reached the highest level since a matching figure in November 1981, partly offsetting recent optimism about the outlook for interest rates.

The subsequent pullback by treasuries may also have reflected ongoing optimism about U.S. trade policy following Monday's news of a U.S.-China trade deal temporarily slashing steep tariffs on each other's goods.

Following a very busy week on the U.S. economic front, the economic calendar for next week is relatively quiet, although reports on weekly jobless claims and new and existing home sales may still attract attention along with remarks by several Federal Reserve officials.