On Friday, Treasury markets experienced an upward movement, recovering some of the losses incurred during the prior two-day sell-off. In the morning session, bond prices registered a significant increase before slightly retreating in the afternoon. Consequently, the yield on the benchmark ten-year Treasury note, which inversely correlates with its price, decreased by 4.6 basis points to 4.524 percent.
This downward yield adjustment comes after the ten-year yield reached its highest closing level in over six months during the previous sessions. The recovery of Treasury prices was prompted by traders' reactions to the Federal Reserve's preferred consumer price inflation measure release.
According to the Commerce Department, the Personal Consumption Expenditures (PCE) price index rose by a modest 0.1 percent in November, following a 0.2 percent increase in October. Economists had anticipated a further 0.2 percent uptick. The annual growth rate of the PCE price index accelerated to 2.4 percent in November from 2.3 percent in October, although this was slightly below the 2.5 percent increase forecasted by economists.
Excluding volatile food and energy prices, the core PCE price index also showed a slight rise of 0.1 percent in November, down from a 0.3 percent rise in October. Economists had predicted a 0.2 percent increase for core prices. The annual growth rate for the core PCE price index in November remained steady at 2.8 percent, unchanged from October, while expectations were for a rise to 2.9 percent.
The softer-than-expected inflation rates appeared to encourage traders to invest in bonds at lower levels following the recent sell-off. The decline in Treasury prices during the previous sessions followed the Federal Reserve's indication of fewer anticipated interest rate cuts next year, driven by ongoing concerns over persistent inflation.
Chicago Federal Reserve President Austan Goolsbee conveyed to CNBC's Steve Liesman his optimism that the recent months of firm inflation may represent a short-term anomaly rather than a longer-term trend shift.
Trading activity in the upcoming week is expected to be relatively muted due to the Christmas Day holiday on Wednesday. Nonetheless, forthcoming reports on durable goods orders and new home sales could still generate some market interest.
