Treasuries moved moderately higher during trading on Friday, extending the upward move seen in the previous session.
Bond prices moved to the upside in early trading and remained in positive territory throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 1.917 percent.
The strength among treasuries was partly in reaction to the Commerce Department’s report on durable goods orders in the month of March.
While the report showed a much bigger than expected increase in durable goods orders, the jump was primarily due to strength in the volatile transportation sector.
The report said durable goods orders surged up by 4.0 percent in March after slumping by 1.4 percent in February. Economists had expected orders to edge up by just 0.5 percent.
However, excluding a 13.5 percent jump in orders for transportation equipment, durable goods orders actually fell by 0.2 percent in March compared to a 1.3 percent drop in the previous month.
The Commerce Department also said orders for non-defense capital goods excluding aircraft, a closely watched indicator of capital spending, fell by 0.5 percent in March after tumbling by 2.2 percent in February.
Adam Collins, Assistant Economist at Capital Economics, said, “Overall, this suggests that the outlook for business investment in the second quarter has not improved.”
“But with consumption likely to rebound strongly as temperatures have returned to seasonal norms, we think GDP growth will still rebound in the second quarter,” he added.
Nonetheless, trading activity was somewhat subdued on the day as traders looked ahead to next week’s Federal Reserve meeting.
The Fed is not expected to announce an increase in interest rates, but traders will be paying close attention for any hints at a rate hike at the June meeting.
While the Fed announcement is likely to be in the spotlight next week, trading could also be impacted by the release of reports on first quarter GDP, consumer confidence, personal income and spending, and manufacturing activity.
The material has been provided by InstaForex Company – www.instaforex.com