Treasury yields eased Friday, after rising for about 10 days, on news of progress on raising the U.S. debt ceiling in Congress and ahead of the release of April inflation data.
What’s happening
-
The yield on the 2-year Treasury
TMUBMUSD02Y,
4.509%
was 4.51%, down 3.6 basis points. -
The yield on the 10-year Treasury
TMUBMUSD10Y,
3.790%
was 3.8%, down 2.5 basis points. -
The yield on the 30-year Treasury
TMUBMUSD30Y,
3.973%
was 3.98%, down 1.8 basis points.
What’s driving markets
Top House Republicans and the Biden White House on Thursday sounded upbeat on Washington’s debt-ceiling talks, as investors continued to track the efforts to reach a bipartisan deal on lifting the ceiling for federal borrowing and thereby avoid a market-shaking default.
Analysts at Goldman Sachs say the odds are highest the deal is announced late Friday or Saturday. They assigned an 80% chance on a full-fledged deal, and a 10% possibility of a short-term patch.
Meanwhile, the Fed’s preferred inflation measure, the PCE price index for April, is due for release at 8:30 a.m. Eastern, alongside personal income and consumer spending numbers.
“The obvious potential catalyst is the upcoming core PCE Index. If we happen to see a softer reading on this key inflation gauge, it could offset some of the tough talk on rates that we have heard from Fed officials recently and take some steam out of the U.S. dollar,” said Tim Waterer, chief market analyst at KCM Trade.
Economists polled by The Wall Street Journal expect the core PCE price index to rise 0.3%, which would be a 4.6% year-over-year rise.
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