Treasury prices fell on Friday, pushing yields higher, as U.S. equities erased some of the previous session’s slump, sapping appetite for government paper.
U.S. bond markets saw a holiday-shortened session, closing at 2 p.m. Eastern Time, in observance of Memorial Day, and will be closed on Monday.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, +0.00% rose 3.2 basis points to 2.327%, trimming its weeklong drop to 6.9 basis points. The 2-year note yield TMUBMUSD02Y, +0.00% was up 4.5 basis points to 2.175%, marking its biggest daily increase since April 1. The short-dated maturity fell 3 basis points for the week.
The 30-year bond yield TMUBMUSD30Y, +0.00% rose 2.3 basis points to 2.754%, paring its weeklong decline to 7.1 basis points. Debt prices move in the opposite direction of yields.
Meanwhile, yields for British 10-year pounds TMBMKGB-10Y, +0.00% known as gilts, fell a single basis point to 0.955% after U.K. Prime Minister Theresa May announced her resignation due to her inability to pass a Brexit deal.
What’s driving Treasurys?
With stock markets set to take a break from this Thursday’s selloff, inflows into the bond-market waned. The S&P 500 SPX, +0.14% and the Dow Jones Industrial Average DJIA, +0.37% were on course to end higher on Friday, paring their weeklong losses.
President Donald Trump said he anticipated a “fast” trade deal with China, and that the U.S. could pull back its ban against Huawei Technologies Inc. as part of an agreement. Investors have grown fearful that a resolution to the longstanding trade spat between the U.S. and China would remain elusive, with some pointing to the U.S.’s ban on Huawei as a sign of an entrenching dispute between the two sides.
Yields briefly sagged after investors digested some downbeat data on the business investment front. Durable goods orders for April fell 2.1%, following a 2.6% increase in March. The more stable core capital goods orders measure, which excludes defense and aircraft investment, fell 0.9%.
What did market participants say?
“The more tensions escalate and the longer the negotiations continue, the more uncertainty there will be and become more of a drag be on investment spending in the U.S.,” said Ward McCarthy, chief financial economist for Jefferies.