By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices edged down Friday, though 10-year yields are still on pace for a sixth weekly decline, after a report showed the U.S. economy grew at a slower pace in the first quarter than analysts expected.
Yields on 10-year notes 10_YEAR +0.72% added 1 basis point to 1.95%, a reversal after turning down slightly following the Commerce Department’s data on gross domestic product.
Bond prices move inversely to their yields. A basis point is one one-hundredth of a percentage point.
A week ago, 10-year notes yielded 1.97%. A six-week decline in yields would be the longest since last June.
Yields on 5-year notes 5_YEAR +2.18% rose 1 basis point to 0.84%. They’re still likely to end the week lower for a sixth time.
Thirty-year note yields 30_YEAR +0.42% increased 1 basis point to 3.13%. A week ago, they ended at 3.13%, after falling for the prior three weeks.
Treasurys briefly gained after the Commerce Department said GDP rose at a 2.2% annualized rate in the first quarter, slower than the 3.0% pace seen in the prior three months and raising fears that expansion in the biggest global economy could lose traction in coming months. See story on GDP.
“We’d chalk this up to consistent with some of the more softer data,” said David Ader, head of government bond strategy at CRT Capital Group.
Yields were lower during the Asian trading session as the Bank of Japan expanded its asset-purchase program in an effort to fight deflation. Read about Bank of Japan.
Also, Standard & Poor’s downgraded its credit rating on Spain by two notches late Thursday, drawing the market’s attention back to the debt and recession problems of one of Europe’s largest economies. See story on Spain’s downgrade.
“We have a very healthy respect for what the developing stresses in Europe may mean for safe-haven markets generally,” said Bill O’Donnell, head of Treasury strategy at RBS Securities.
However, it’s hard to be bullish on Treasurys when yields sit so close to — and have failed to break below — key levels, he said.
For 10-year notes, that yield level is around 1.91% and for 2-year notes, it’s around 0.25%, he said.
Weak economic data in the U.S. and Europe, as well as worries about an electoral backlash against austerity measures in France and the Netherlands, boosted bonds earlier this week. See recent story on Treasury bonds.
Deborah Levine is a MarketWatch reporter, based in New York.
