MW: Treasurys down as data come in better than expected
Treasury prices stayed lower Friday, pushing yields up, after a government report said durable-goods orders fell less than analysts expected, raising hopes that some areas of the economy may have found a bottom.
Ten-year-note yields ) increased 5 basis points, or 0.05 percentage point, to 2.97%. Bond yields move in the opposite direction as prices.
Orders of products expected to last several years declined 0.8% in March., the Commerce Department said. Analysts surveyed by MarketWatch had predicted a 2% slide. The report also revised lower February's big increase in orders. See more on durable-goods data.
Still, durable goods orders have been positive over the past two months, far better than the double-digit declines in previous months.
"The sharp contrast between the past two months and the previous four hence qualifies the durables data as having stabilized, relatively speaking," said Tony Crescenzi, chief bond market strategist at Miller Tabak & Co.
Later, a report is expected to show new-home sales slowed slightly last month.
Also pushing yields higher may be sales of existing securities before the Treasury sells $101 billion in new debt next week. Traders also noted some selling that typically follows corporate-bond issuance.
Whither the Fed
Next week also brings the Federal Reserve's policy-setting meeting. At the last meeting, in March, the central bank surprised markets by saying it planned to buy $300 billion of Treasury securities in an effort to keep lending rates low and spur economic growth.
Treasurys are benchmarks for corporate debt, mortgages, consumer-loan rates on things like automobiles, and municipal debt, so keeping yields low is intended to make borrowing on all of those more affordable.
Benchmark 10-year-note yields plunged a half a percentage point on the announcement, but have come almost all the way back up to near 3% since then, raising questions about whether the Fed will be satisfied with the level of rates. To date, the Fed has purchased $80.81 billion of U.S. debt under this program.
'They could decide to increase the size of the scheduled issuance," David Ader, head of government bond strategy at RBS Greenwich Capital.
Late last year, the Fed started a similar program to buy mortgage-backed securities and housing-agency debt, and later vastly increased the amounts it intended to purchase.
Yields moves may be limited as traders await the government's release of how it is stress-testing banks. While no details on how individual banks scored are expected, analysts are grasping for any information on the tests.
