Treasuries Finish Volatile Session Roughly Flat

Treasuries saw considerable volatility over the course of the trading session on Friday before eventually ending the day roughly flat.

Bond prices spent most of the day swinging back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.810 percent.

The volatility on the day came as traders kept a close eye on the latest developments regarding the debt ceiling negotiations.

Recent reports suggest lawmakers are inching closer to an agreement that would raise the debt limit for about two years and cap federal spending at the same level as fiscal 2023 for two years.

A report from CNBC said the deal would also include rescinding some of the $80 billion allocated for the IRS by last year’s Inflation Reduction Act.

House Speaker Kevin McCarthy, R-Calif., told reporters negotiators made progress during a meeting Thursday night and expressed optimism they would make “more progress today and finish the job.”

However, clear sticking points remain in the ongoing talks, including implementing work requirements for social assistance programs like food stamps.

Bond traders were also reacting to a Commerce Department report showing a reacceleration in the annual rate of consumer growth in the month of April.

The report said the annual rate of consumer price growth accelerated to 4.4 percent in April after slowing to 4.2 percent in March. Economists had expected the pace of growth to slow to 3.9 percent.

The annual rate of growth by core consumer prices, which exclude food and energy prices, also accelerated to 4.7 percent in April after slowing to 4.6 percent in March. Economist had expected the pace of growth to be unchanged.

On a monthly basis, consumer prices rose by 0.4 percent in April after inching up by 0.1 percent in March, while core consumer prices also increased by 0.4 percent in April after rising by 0.3 percent in March.

Ryan Sweet, Chief US Economist at Oxford Economics, said the data will “keep the discussion about the Fed skipping a hike in June and then resume tightening in July alive.”

Any Memorial Day weekend developments on the debt ceiling front may impact trading early next week, while the Labor Department’s monthly jobs report is likely to attract attention later in the week.

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