Treasury yields were drifting lower Friday afternoon in the absence of any major U.S. economic data or appearances by Federal Reserve officials.
What’s happening
- The yield on the 2-year Treasury BX:TMUBMUSD02Y was 4.703%, down less than 1 basis point from 4.712% on Thursday. Yields move in the opposite direction to prices.
- The yield on the 10-year Treasury BX:TMUBMUSD10Y was 4.245%, down 8.1 basis points from 4.326% on Thursday.
- The yield on the 30-year Treasury BX:TMUBMUSD30Y was 4.370%, down 9.1 basis points from 4.461% on Thursday.
What’s driving markets
Friday brought a lack of any major catalysts for bond traders. Instead, Wall Street was bracing for the possibility of another round of U.S. data next week that could show continued strength in the world’s largest economy.
Next Wednesday, the first revision to fourth-quarter gross domestic product is set to be released. That will be followed the next day by January’s reading on the Federal Reserve’s preferred inflation gauge, the personal consumption expenditures, or PCE, price index.
Read: ‘No-landing’ scenario and strong stock market raise the risk of a bonds selloff
In a speech delivered late Thursday, Fed Gov. Lisa Cook said central bankers need greater confidence inflation is converging to 2% before cutting interest rates. Meanwhile, her colleague, Fed Gov. Christopher Waller, made a similar point Thursday evening, saying there’s no rush to reduce borrowing costs.
What analysts are saying
The next move in interest rates by the Federal Reserve could actually be up, said former U.S. Treasury Secretary Larry Summers, citing the strength in the economy and “increasing evidence that inflation may be less down for the count than many people supposed.”
He said four rate cuts — as Goldman Sachs economists are expecting — could well happen, “but is a probably above the center of mass of what I think.”
