Treasuries Extend Upward Move Amid Lack Of Progress On Stimulus

(RTTNews) - Treasuries moved modestly higher during trading on Friday, extending the upward move seen over the course of the previous session.

Bond prices gave back some ground after an early advance but remained in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.5 basis points to 0.893 percent.

The continued strength among treasuries came as lawmakers in Washington remain at an impasse over a new fiscal stimulus bill.

The Senate managed to pass a temporary spending bill to prevent a government shutdown on Saturday, but the lack of a breakthrough on a new relief package has raised concerns about traders.

Despite prolonged negotiations, Republicans and Democrats remain at odds over issues such as aid for state and local governments and unemployment assistance.

Buying interest was somewhat subdued, however, as traders also reacted to more upbeat news regarding a potential coronavirus vaccine.

On Thursday, an FDA advisory committee voted in support of the coronavirus vaccine developed by Pfizer (PFE) and BioNTech (BNTX).

FDA Commissioner Stephen Hahn subsequently said the agency will rapidly work toward finalization and issuance of an emergency use authorization.

In U.S. economic news, the University of Michigan released a report showing an unexpected improvement in consumer sentiment in the month of December.

The report said the consumer sentiment index climbed to 81.4 in December from 76.9 in November. The increase surprised economists, who had expected the index to edge down to 76.5.

Surveys of Consumers chief economist Richard Curtin said the unexpected improvement in consumer sentiment was due to a partisan shift in economic prospects.

"Following Biden's election, Democrats became much more optimistic, and Republicans much more pessimistic, the opposite of the partisan shift that occurred when Trump was elected," said Curtin.

Curtin called it "surprising" that the recent resurgence in coronavirus infections and deaths was overwhelmed by partisanship.

Traders are likely to keep a close eye on developments in Washington next week, although reports on industrial production, retail sales, homebuilder confidence and housing starts may also attract attention.

While the Federal Reserve is also scheduled to hold a monetary policy meeting, the central bank is widely expected to leave interest rates unchanged for the foreseeable future.