Treasury yields flat as government bonds wrap up monthly, quarterly trade

Treasurys were little changed on Friday in the last trading day of the week, month and quarter, which has seen investors wrestle with a Federal Reserve’s commitment to normalize monetary policy despite signs of sluggish inflation.

What are bond yields doing?

The benchmark 10-year Treasury yield

TMUBMUSD10Y, -0.42%

 was virtually unchanged at 2.311%, compared with 2.309%, late Thursday in New York. The shorter-dated 2-year note yield

TMUBMUSD02Y, +0.02%

 was at 1.463%, versus 1.455%. Meanwhile, the 30-year bond yield

TMUBMUSD30Y, -0.22%

 traded at 2.873%, compared with 2.870% Thursday in New York.

Bond yields move in the opposite direction of prices.

What else is moving markets?

President Donald Trump’s tax proposal continues to dominate discussion, with members of the administration emphasizing that a proposed cut in the corporate income-tax rate to 20% isn’t negotiable.

Inflation and sentiment data later could be influential for the market, especially given the focus on inflation which has run below the Federal Reserve’s 2% annual target. Inflation can chip away at a bond’s fixed value, with signs of tepid price increases and inflation supporting bond buying and pushing yields down.

What are bond traders and strategists saying?

Strategists at Barclays led by Jason Goldberg in a Friday research note point out that the so-called term premium between 2-year and 10-year government bonds are at the widest in about 5 weeks. A wider spread between those maturities is often seen as a bullish indicator for financial companies, which borrow on a short-term basis and lend on a longer-term basis.

Which Federal Reserve speakers are ahead

Philadelphia Fed President Patrick Harker will give a speech at 11 a.m. Eastern on the economic outlook as well as on fintech at a conference at his regional bank.

What data are ahead?

  • August readings for personal income, consumer spending and core inflation are set to come out at 8:30 a.m. Eastern Time
  • At 9:45 a.m., the Chicago purchasing managers index for September is due
  • At 10 a.m. Eastern, consumer sentiment for September will be released

Which other assets are moving?

The yield for the 10-year German bond

TMBMKDE-10Y, -5.32%

known as the bund, was at 0.454%. The sovereign paper is viewed as a gauge of the health of the European economy, because Germany is the largest eurozone economy.

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