Treasuries experienced a rebound on Thursday, after pressure in the preceding trading session. Bond prices rose early in the session and maintained their positive trajectory throughout the day, causing the ten-year note yield to slide 4.6 basis points to 4.132 percent. This decrease saw the ten-year yield retreat following Wednesday's closing at its highest level in over a month.
Stronger than anticipated U.S. economic growth and a slowdown in consumer price growth in the final quarter of 2023, as reflected in a Commerce Department report, contributed to the resurgence of treasuries. The report revealed a 3.3 percent rise in gross domestic product in the fourth quarter, following a 4.9 percent surge in the third. This exceeded economists' expectations of a 2.0 percent increase.
There was also a continued surge in consumer spending, with a 2.8 percent increase in the fourth quarter following a 3.1 percent rise in the preceding quarter. The report's inflation findings revealed a 1.7 percent increase in the personal consumption expenditures price index in Q4, compared to a 2.6 percent rise in the Q3. When excluding food and energy prices, the PCE price index increased by 2.0 percent in Q4, as in the third quarter.
Jamie Cox, Managing Partner for Harris Financial Group, hailed these results as the ideal combination of robust consumer spending and declining inflation. He believes that this condition might influence the Federal Reserve to lower rates this year.
However, the Commerce Department reported that orders for U.S. manufactured durable goods remained unchanged in December, contrary to expectations of a 1.1 percent rise. These orders had soared by 5.5 percent in November. Orders for durable goods, excluding transportation equipment, increased by 0.6 percent in December following a 0.5 percent rise in November. Analysts had anticipated a modest rise of 0.2 percent.
A Labor Department report showed that initial unemployment claims rose more than expected to 214,000 in the week ended January 20th, an increase of 25,000 from the previous week. Economists expected a rise to 200,000 from the previously reported 187,000.
The Treasury Department also reported that this month's auction of $41 billion worth of seven-year notes attracted slightly above average demand, resulting in continued strength for Treasuries in afternoon trading.
Inflation readings, seen as the Federal Reserve's preferred, will likely be the focus on Friday, included in a report on personal income and spending. It is expected that this data could significantly impact interest rate outlooks.
