Bond yields continued to slide on Friday as recent data indicate a slowing economy. Investors are eagerly anticipating a key auction next week. Here are the latest developments:
Yield Movements
- The yield on the 2-year Treasury (BX:TMUBMUSD02Y) dropped by 3.1 basis points to 4.81%. Remember, yields move opposite to prices.
- The yield on the 10-year Treasury (BX:TMUBMUSD10Y) also decreased by 4 basis points, standing at 4.4%. It was as high as 5% just a month ago.
- The yield on the 30-year Treasury (BX:TMUBMUSD30Y) fell by 4.5 basis points to 4.57%.
Influencing Factors
A rise in jobless claims data, considered an early indicator of a recession, was released yesterday. Continuing claims have reached the higher end of the range seen in 2018 and 2019. However, this fits a typical seasonal pattern where the labor market tends to improve early in the year and worsen toward the end. Strategists at BCA Research suggest that this may actually imply a more positive message about labor market conditions in early 2024, potentially signaling that a recession is not imminent.
While there are some positive signs, other indicators suggest that activity and prices are declining. Notably, the recent CPI and PPI data showed deterioration, and Walmart's CEO hinted at possible deflation in the United States.
Economic Calendar
Housing starts will be in the spotlight on the U.S. economic calendar this week. Additionally, a number of Federal Reserve policymakers are scheduled to speak.
Also worth noting is that the U.S. is set to auction $16 billion of 20-year notes on Monday.
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