Treasuries Recover From Sustained Weakness In Early Trading

After an early move to the downside, treasuries regained ground over the course of the trading session on Friday.

Bond prices pulled back off their best levels in afternoon trading but remained modestly higher. As a result, the yield on the benchmark ten-year note which moves opposite of its price, edged down by 1.1 basis points to 3.697 percent.

The ten-year yield reached a twelve-year intraday high of 3.773 percent before giving back ground over the course of the session.

The turnaround by treasuries may have reflected bargain hunting following recent weakness in the bond markets amid concerns about higher interest rates.

Treasuries may also have benefited from their appeal as a safe haven amid concerns about the outlook for the global economy following aggressive interest rate hikes by central banks around the world.

Traders remain concerned the central banks’ efforts to combat elevated inflation will push the global economy into a recession.

The Federal Reserve raised interest rates by another 75 basis points earlier this week and signaled more significant rate hikes later this year.

While the Fed’s projections pointed to an eventually tapering of rate hikes by next year, traders worry about the outlook for the global economy in the months ahead.

Fed Chair Jerome Powell spoke at a Fed Listens event this afternoon but did not specifically comment on monetary policy, instead commenting on the economy in general terms.

“We continue to deal with an exceptionally unusual economic set of disruptions. As policymakers, we are committed to using our tools to help steer the economy through what has been a uniquely challenging period,” Powell said.

He added, “The insights you share in these events help us home in on the challenges and opportunities that are shaping what we might think of as the new normal of the American economy.”

Next week’s trading may be impacted by reaction to reports on durable goods orders, consumer confidence, new home sales and personal income and spending.

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