U.S. Treasury yields saw a slight increase on Friday as traders reacted to an increase in weekly jobless claims and its potential impact on interest rates. The 10-year Treasury yield rose more than 1 basis point to trade at 4.463%, while the 2-year Treasury yield also increased by 1 basis point to 4.823%. Yields and prices move in opposite directions, and one basis point represents 0.01%. These movements followed pressure on yields the previous day after a strong demand in the Treasury Department’s auction of 30-year bonds.
Traders are now focusing on the Federal Reserve’s interest rate trajectory following the successful auction outcome. Weekly initial jobless claims, which hit their highest level since August 2023 at 231,000, led futures to increase the likelihood of rate cuts this year. Analysts from Deutsche Bank noted that Treasurys outperformed on Thursday due to this data, with investors now expecting a more dovish stance on monetary policy than previously anticipated. The next key event to watch is the U.S. inflation numbers for April, due next week.
The Bank of England held interest rates as expected on Thursday but raised expectations of a rate cut in June. On Friday, consumer sentiment data for May is expected to show a slight easing from 77.2 to 76. Additionally, several Fed presidents, including Lorie Logan from Dallas, Neel Kashkari from Minneapolis, and Austan Goolsbee from Chicago, are scheduled to speak. Fed Governor Michelle Bowman will also be making comments, adding to the market’s focus on central bank policies and interest rate decisions.
Overall, the U.S. Treasury yields have been reacting to economic data and central bank statements, with investors closely monitoring jobless claims, inflation numbers, and interest rate decisions. The market sentiment seems to be leaning towards a more dovish stance on monetary policy, with expectations of potential rate cuts. The outcome of the consumer sentiment data and comments from Fed officials will provide further insights into the future direction of interest rates and bond yields. Traders are adjusting their positions based on these factors and the overall economic environment.
