Ten-Year Yield Slumps To Two-Month Closing Low

(RTTNews) - Treasuries showed a strong move to the upside during trading on Friday, extending the advance seen during the previous session.

Bond prices moved higher early in the day and climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 8.0 basis points to 4.420 percent.

The ten-year yield added to the 3.5 basis point drop seen during Thursday's session, ending the day its lowest closing level in two months.

The strength among treasuries came after the University of Michigan released a report showing consumer sentiment in the U.S. deteriorated by much more than previously estimated in the month of February.

The University of Michigan said its consumer sentiment index for February was downwardly revised to 64.7 from a preliminary reading of 67.8. Economists had expected the index to be unrevised.

With the unexpected downward revision, the consumer sentiment index is well below the January reading of 71.7, tumbling to its lowest level since hitting 61.3 in November 2023.

The substantial deterioration by consumer sentiment came amid a surge by year-ahead inflation expectations, which spiked to 4.3 percent in February from 3.3 percent in January, reaching the highest level since November 2023.

Long-run inflation expectations also rose to 3.5 percent in February from 3.2 percent in January, reflecting the largest month-over-month increase since May 2021.

"For both short- and long-run inflation expectations, this month's increases were widespread and seen across income and age groups," said Surveys of Consumers Director Joanne Hsu. "Inflation expectations rose this month for Independents and Democrats alike; they fell slightly for Republicans."

Treasuries also benefitted from a sell-off on Wall Street, with the S&P 500 pulling back well off the record closing high set on Wednesday.

While the U.S. economic calendar gets off to a relatively quiet start next week, the Federal Reserve's preferred readings on consumer price inflation are likely to be in focus later in the week.