Treasuries Close Roughly Flat Following Recent Weakness

(RTTNews) - After trending lower over the past several sessions, treasuries showed a lack of direction during the trading day on Friday.

Bond prices spent most of the day lingering near the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edge down less than a basis point to 4.467 percent.

The choppy trading on the day came as traders took a step back to assess the recent weakness in the bond market, which saw the ten-year yield close higher fives time over the six previous sessions.

Renewed concerns about the outlook for interest rates have recently weighed on treasuries, with the Federal Reserve seen as increasing likely to keep interest rates higher for longer than previously though.

According to CME Group's FedWatch Tool, the chances rates will be lower by September have tumbled to 53.4 percent from close to 90 percent earlier this month.

On the U.S. economic front, the Commerce Department released a report showing an unexpected increase in durable goods orders in the month of April, although the growth came following a significantly downwardly revised jump in March.

The report said durable goods orders climbed by 0.7 percent in April following a downwardly revised 0.8 percent advance in March.

Economist had expected durable goods orders to decrease by 0.8 percent compared to the 2.6 percent surge originally reported for the previous month.

Excluding orders for transportation equipment, durable goods orders rose by 0.4 percent in April after coming in unchanged in March. Ex-transportation orders were expected to inch up by 0.1 percent.

A separate report released by the University of Michigan showed consumer sentiment in the U.S. deteriorated slightly less than previously estimated in the month of May.

The report said the consumer sentiment index for May was upwardly revised to 69.1 from the preliminary reading of 67.4. Economists had expected the index to be unrevised.

Despite the upward revision, the consumer sentiment index still fell sharply from 77.2 in April, slumping to its lowest level since hitting 61.3 last November.

Meanwhile, the report showed year-ahead inflation expectations increased by much less than previously estimated, inching up to 3.3 percent in May from 3.2 percent in April.

The University of Michigan had previously reported year-ahead inflation expectations jumped to 3.5 percent, although the downwardly revised figure still represents the highest level since hitting 4.5 percent last November.

The revised data also showed long-run inflation expectations held steady at 3.0 percent for the second straight month compared to the previously reported uptick to 3.1 percent.

Following the long Memorial Day weekend, the U.S. economic calendar gets off to a relatively quiet start next week but picks up as the week progresses.

Next Friday, the Commerce Department is scheduled to release its report on personal income and spending in April, which includes closely watched inflation readings said to be preferred by the Fed.