Treasuries Regain Ground After Early Pullback But Still Close Lower

After pulling back sharply early in the session, treasuries regained some ground over the course of the trading day on Friday.

Bond prices climbed well off their early lows but still closed in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.2 basis points to 3.482 percent after reaching a high of 3.557 percent.

The early pullback by treasuries came as traders cashed in on recent strength in the bond market amid lingering concerns about the outlook for interest rates.

The Federal Reserve raised interest rates by 50 basis points on Wednesday and signaled it plans to continue raising interest rates next year.

Treasuries staged a notable recovery attempt, however, as bonds continued to benefit from their appeal as a safe haven amid worries about the central bank’s aggressive rate hikes tipping the economy into a recession.

A recent batch of disappointing economic data has led to fears the Fed’s fight against inflation is already taking its toll on the economy.

Next week, the Commerce Department is due to release its report on personal income and spending, which includes a reading on inflation said to be preferred by the Fed.

With Fed Chair Jerome Powell saying the central bank will require “substantially more evidence” inflation is on a sustained downward trend before halting its rate hikes, traders are likely to keep a close eye on the inflation reading.

Along with the closely watched inflation reading, traders are also likely to been an eye on a slew of housing data as well as reports on consumer confidence and durable goods orders

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