Treasuries Extend Pullback Seen In Previous Session

Following the notable pullback seen in the previous session, treasuries saw further downside during trading on Friday.

Bond prices regained some ground after coming under pressure in early trading but remained negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.6 basis points to 1.093 percent.

The early weakness among treasuries came as traders continue to react to Thursday’s upbeat economic data, including a Commerce Department showing U.S. GDP grew 4.0 percent in the fourth quarter.

The Commerce Department released a separate report this morning showing a much bigger than expected increase in U.S. personal income in the month of December, although the report also showed a modest decrease in personal spending.

The report said personal income climbed by 0.6 percent in December after tumbling by a downwardly revised 1.3 percent in November.

Economists had expected personal income to inch up by 0.1 percent compared to the 1.1 percent slump originally reported for the previous month.

Meanwhile, the Commerce Department said personal spending dipped by 0.2 percent in December after falling by a downwardly revised 0.7 percent in November.

Economists had expected spending to decrease by 0.4 percent, matching the drop originally reported for the previous month.

The University of Michigan also released a report showing consumer sentiment deteriorated by slightly more than initially estimated in the month of January.

The report said the consumer sentiment index for January was downwardly revised to 79.0 from the preliminary reading of 79.2.

Economists had expected the consumer sentiment index to be unrevised from the preliminary reading, which was still down from 80.7 in December.

Another report released by the National Association of Realtors on Friday showed pending home sales in the U.S. fell by more than expected in the month of December.

NAR said its pending home sales index slipped by 0.3 percent to 125.5 in December after tumbling by 2.5 percent to 125.9 in November. Economists had expected the index to edge down by 0.1 percent.

Pending home sales decreased for the fourth consecutive month but were still up by 21.4 percent compared to the same month a year ago.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The Labor Department’s closely watched monthly jobs report is likely to attract attention next week along with reports on manufacturing and service sector activity, factory orders and the U.S. trade deficit.

Source: Read Full Article