On Friday, Treasuries saw modest gains, building on a positive trajectory from recent sessions.
Although bond prices retraced some of their early advances, they maintained their upward momentum. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, fell by 2.5 basis points to 4.213 percent.
This marks the fourth consecutive session that the ten-year yield has declined, reaching its lowest closing level in over two months.
Treasuries continued to be buoyed by favorable inflation data, highlighted by a Labor Department report indicating unexpected declines in U.S. import and export prices for May.
The Labor Department reported a 0.4 percent decrease in import prices for May, following a 0.9 percent rise in April. Economists had anticipated a modest increase of 0.1 percent for May.
The decline in fuel import prices, which dropped by 2.0 percent, led this trend, although non-fuel import prices also fell by 0.3 percent.
Simultaneously, the report highlighted a 0.6 percent decrease in export prices for May, following a revised 0.6 percent increase in April. Economists had expected export prices to remain unchanged from the initially reported 0.5 percent increase.
Additionally, a University of Michigan report revealed a continued decline in U.S. consumer sentiment for June.
The consumer sentiment index fell to 65.6 in June, down from 69.1 in May. Economists had predicted a rebound to 72.0.
This unexpected drop brings the consumer sentiment index to its lowest level since November 2023, when it hit 61.3.
Regarding inflation, the report noted that year-ahead inflation expectations held steady at 3.3 percent in June, remaining above the 2.3-3.0 percent range observed in the two years preceding the pandemic.
Long-term inflation expectations edged up to 3.1 percent in June from 3.0 percent in May, hitting their highest level since reaching 3.2 percent in November 2023.
Next week’s economic focus will likely be on reports covering retail sales, industrial production, housing starts, and existing home sales. However, trading activity might be somewhat muted due to the Juneteenth holiday on Wednesday.
