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Treasurys were being bought Friday, pulling yields down, ahead of publication of a measure of the Federal Reserve’s preferred inflation gauge for June.
The session will mark the final trading day in July, which has seen long-dated debt yields mostly fall to four month lows while equities remained at or near record levels, amid an economic recovery from COVID-19 which has been marked by a spike in new Covid cases sparked by the spread of the delta variant of the coronavirus.
What yields are doing
-
The 10-year Treasury note
TMUBMUSD10Y,
1.241%
yields 1.247%, compared with 1.269% at 3 p.m. Eastern on Thursday. Yields for debt fall as prices rise. -
The 30-year Treasury yield
TMUBMUSD30Y,
1.895%
was at 1.903%, versus 1.916% a day ago. -
The 2-year Treasury note rate
TMUBMUSD02Y,
0.203%
was at 0.200%, compared with 0.202% on Thursday.
The stats
For the week, the 10-year Treasury yield is down 3.9 basis points, 30-year is down 2.2 basis points, while the 2-year was virtually unchanged over the period.
For the month, the 10-year yield is down 19.6 basis points, the bond was down 16.2 basis points, and the 2-year was off 4.7 basis points.
Fixed-income drivers
The June personal-consumption expenditures index is due to be released at 8:30 a.m. Eastern Time and is considered the Fed’s preferred measure of inflation. Economists polled by the Wall Street Journal estimate that the Commerce Department will report that PCE—a measure of household spending on goods and services—increased 0.7% last month.
The data come after a reading of second-quarter U.S. gross domestic grew at a 6.5% annualized rate, with consumer spending climbing sharply at an 11.8% annual rate. Spending on services contributed the most to the change in GDP, followed by purchases of goods.
A reading of second-quarter U.S. employment cost index are also set to be released at the same time as PCE on Friday.
Looking ahead, a measure of business conditions in the Chicago region, the Chicago Business Barometer, is due at 9:45 a.m., and the University of Michigan’s consumer sentiment data for July will be released at 10 a.m.
What strategists and traders say
“We forecast that core PCE inflation reached 0.6% mom in June, pushing the 12-month rate up to 3.6%. Core CPI inflation figures for June rose by a very strong 0.9% mom, driven by used-car prices and reopening categories, again,” wrote analysts at UniCredit, in a daily note.
