U.S. government bonds on Friday were being bought, nudging prices up and yields lower, as investors awaited a report on April retail sales at 8:30 a.m. Eastern Time, and a batch of other data points, to cap a turbulent week of trading on Wall Street.
For the week, bond yields have mostly climbed after sinking in the aftermath of last week’s surprisingly weak April jobs report, but some analysts have said that the fall in yields on Thursday and Friday reflects the view that government debt had reached oversold conditions after data on Wednesday showed consumer price inflation soared in April to a 13-year high.
How are Treasurys performing?
The 10-year Treasury rate
was at 1.641%, off 2.7 basis points from rates at 3 p.m. on Thursday.
The 30-year Treasury
known as the long bond, was yielding 2.366%, off 2.9 basis points.
The 2-year Treasury rate
was at 0.145%, retreated 1.14 basis points.
For the week, the 10-year Treasury was up 6.5 basis points, the long bond’s yield was up 9.1 basis point, while the 2-year Treasury yield has put in a weekly rise of 0.2 basis point, based on last Friday’s closing levels.
What’s driving the fixed-income market?
The inflation shock that started with hotter-than-expected consumer price data on Wednesday is subsiding somewhat in the market for U.S. Treasuries.
The path forward is expected to be one fraught with volatility driven by uncertainty about the path of pricing pressures in the economy as U.S. businesses rebound from the worst pandemic in a century.
The Centers for Disease Control and Prevention eased mask-wearing guidance for fully vaccinated people on Thursday. The new guidance is seen clearing the way for fuller reopening of schools and workplaces, which could support further economic growth.
Against that backdrop, economists expect a 0.8% rise in retail sales for April, after a 9.8% jump thanks to pent-up demand in March. Excluding autos, sales are forecast to rise 0.6% after an 8.4% March increase.
In other data, investors will watch for a reading of import prices for April also at 8.30 a.m. ET. It’s forecast to show a 0.5% increase after a 1.2% March rise.
The Federal Reserve also will release April industrial production and capacity utilization figures at 9:15 a.m. Production is forecast to rise 0.8% after a 1.4% March jump. Capacity utilization is seen rising to 74.9% from 74.4%.
What are strategists saying?
“The calmer market backdrop may extend through today’s bridge day and possibly into next week as the market has made room for further near-term inflation surprises,” wrote Rainer Guntermann, ates strategist at Commerzbank AG, in a research note.