Treasuries Show Modest Rebound Following Yesterday’s Downturn

Treasuries moved modestly higher during trading on Friday, regaining ground following the significant downturn seen in the previous session.

Bond prices gave back ground after an early advance but still managed to close in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 1.7 basis points to 0.729 percent.

The modest drop by the ten-year yield came after the advance seen on Thursday lifted the yield to its highest closing level in over two months.

The modest rebound by treasuries came as traders continued to digest Federal Reserve Chair Jerome Powell’s announcement of the central bank’s adoption of “average inflation targeting.”

Powell’s comments on Thursday were seen as an indication the Fed will leave interest rates at near-zero levels for the foreseeable future even if there is an acceleration in the pace of inflation.

On the U.S. economic front, the Commerce Department released a report showing an unexpected increase in personal income in July.

The Commerce Department said personal income rose by 0.4 percent in July after slumping by 1.0 percent in June. The rebound surprised economists, who had expected income to dip by another 0.2 percent.

The report also showed a continued surge in personal spending, which jumped by 1.9 percent in July after spiking by 6.2 percent in June. Economists had expected spending to increase by 1.5 percent.

The University of Michigan also released a report showing consumer sentiment in the U.S. improved by more than initially estimated in the month of August.

The report said the consumer sentiment index for August was upwardly revised to 74.1 from the preliminary reading of 72.8. The index is now well above the July reading of 72.5.

The upward revision came as a surprise to economists, who had expected the consumer sentiment index to be unrevised at 72.8.

Looking ahead, the Labor Department’s monthly jobs report is likely to be in focus next week along with reports on manufacturing and service sector activity, factory orders, and the U.S. trade deficit.

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