Treasuries Close Modestly Lower After Early Volatility
(RTTNews) - Treasuries showed a lack of direction in morning trading on Friday before getting stuck in negative territory in the afternoon.
Bond prices moved roughly sideways going into the close, ending the day modestly lower. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 0.628 percent.
The choppy trading seen for much of the session came as traders generally remain optimistic about the economic outlook but can't ignore the troubling headlines on the coronavirus front.
The U.S. reported a record 77,255 new coronavirus cases on Thursday, according to data compiled by Johns Hopkins University.
Reflecting the widespread resurgence of the coronavirus, the University of Michigan released a report showing an unexpected deterioration in U.S. consumer sentiment in the month of July.
The preliminary report said the consumer sentiment index tumbled to 73.2 in July after jumping to 78.1 in June. The pullback surprised economists, who had expected the index to inch up to 79.0.
With the unexpected decrease, Surveys of Consumers chief economist Richard Curtin noted the index is "insignificantly" above the nearly nine-year low set in April.
"Following the steepest two-month decline on record, it is not surprising that consumers need some time to reassess the likely economic impact from the coronavirus on their personal finances and on the overall economy," Curtin said.
He added, "Unfortunately, declines are more likely in the months ahead as the coronavirus spreads and causes continued economic harm, social disruptions, and permanent scarring."
Meanwhile, a separate report released by the Commerce Department showed a substantial increase in new residential construction in the U.S. in the month of June.
The Commerce Department said housing starts spiked by 17.3 percent to an annual rate of 1.186 million in June after jumping by 8.2 percent to an upwardly revised rate of 1.011 million in May.
Economists had expected housing starts to soar by 20 percent to a rate of 1.169 million from the 974,000 originally reported for the previous month.
With the increase, the annual rate of housing starts continued to recover from the five-year low of 934,000 set in April.
The report also said building permits increased by 2.1 percent to an annual rate of 1.241 million in June after surging up by 14.1 to a downwardly revised rate of 1.216 million in May.
Building permits, an indicator of future housing demand, had been expected to jump by 5.7 percent to a rate of 1.290 million from the 1.220 million originally reported for the previous month.
The economic calendar for next week is relatively quiet, although traders are likely to keep an eye on the weekly jobless claims report as well as data on new and existing home sales.