By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices recovered a small gain on Friday, pushing yields down, after a pair of economic reports on U.S. growth and consumer sentiment.
Bond yields, which move inversely to prices, have been in a tight range lately as investors remain positioned for bonds to fall further. Equities have performed well even in light of a deteriorating debt situation in Europe as well as the nuclear crisis in Japan and ongoing violence in Libya.
Yields on 10-year notes (UST10Y 3.39, -0.02, -0.50%) slipped 1 basis point to 3.39%, after trading up to 3.42% after the U.S. government’s final report on growth in gross domestic product for the fourth quarter of 2010. A basis point is 1/100th of a percent.
Yields on 2-year notes (UST2YR 0.69, -.00, -0.58%) fell 1 basis point to 0.69%.
Thirty-year bond yields (UST30Y 4.46, -0.02, -0.49%) stayed down by 2 basis points at 4.47%.
U.S. debt erased a small advance after the data showing that GDP grew at a faster pace in the fourth quarter than previously estimated. The Commerce Department said GDP grew at a 3.1% annualized rate, up from an earlier 2.8% estimate. Read story on GDP.
Treasurys did a little better after the Thomson Reuters/University of Michigan index on consumer sentiment fell this month by more than some analysts had predicted.
Still to come is a Federal Reserve buyback of debt.
Also Friday, the market took little direction from comments by several Federal Reserve officials.
Dallas Fed President Richard Fisher focused on the need for the U.S. to get its fiscal house in order, according to Dow Jones Newswires, He is considered among the more hawkish members of the Federal Open Market Committee, favoring tightening monetary policy.
Minneapolis Fed President Narayana Kocherlakota and Atlanta Fed Dennis Lockhart both said that the central bank’s current policy is appropriate and that the impact of energy prices on inflation is transitory, according to Dow Jones.
Their comments are similar to recent remark made by Fed Chairman Ben Bernanke.
Looking toward next week’s auctions, data
Traders may already be preparing for next week’s trio of U.S. auctions, which often entail selling current holdings of a maturity to be auctioned to get a better price on the newer, more liquid securities.
Also, late next week, the U.S. will release its monthly employment report — always one of the most closely watched pieces of data.
“The result of that somewhat bearish price action in the face of bullish news leaves us believing that the market is focused on supply concessions and the nonfarm-payrolls setup for next week,” said George Goncalves, bond strategist at Nomura Securities.
On Thursday, Treasury yields rose as investors shrugged off seemingly negative news around the world and favored stocks and commodities. See Thursday’s Bond Report.
