Treasuries Give Back Ground Following Yesterday’s Rally

Following the substantial upward move seen in the previous session, treasuries gave back some ground during trading on Friday.

Bond prices moved lower early in the session and remained in the red throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 2.324 percent.

With the increase on the day, the ten-year yield rebounded after ending Thursday’s trading at its lowest closing level in well over a year.

The pullback by treasuries partly reflected profit taking, with some traders cashing in on the strong upward move seen in the previous session.

Easing trade concerns also reduced the appeal of treasuries, as President Donald Trump said he remains hopeful of a U.S.-China trade deal, noting he will meet with Chinese President Xi Jinping at the G20 summit next month.

“And I think things, probably, are going to happen with China fast because I can’t imagine that they can be thrilled with thousands of companies leaving their shores for other places,” Trump said in remarks to farmers impacted by the escalating trade dispute.

Selling pressure was somewhat subdued, however, as some traders stuck to the sidelines ahead of the long Memorial Day weekend.

Uncertainty about the outlook for Brexit may also kept some traders on the sidelines following news of the resignation of U.K. Prime Minister Theresa May.

On the U.S. economic front, the Commerce Department released a report showing a pullback in durable goods orders in the month of April.

The report said durable goods orders tumbled by 2.1 percent in April after jumping by a downwardly revised 1.7 percent in March.

Economists had expected orders to slump by 2.0 percent compared to the 2.6 percent spike that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders were unchanged in April following a revised 0.5 percent drop in March. Economists had expected a 0.2 percent uptick.

Following the holiday weekend, reports on consumer confidence, pending home sales, and personal income and spending are likely to attract attention next week.

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.

The Treasury plans to sell $40 billion worth of two-year notes and $41 billion worth of five-year notes next Tuesday and $32 billion worth of seven-year notes next Wednesday.

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