By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose on Friday, putting them on track for a fourth day of gains this week as worries over potential changes in monetary policy continued to ease.
The 10-year note 10_YEAR -2.17% yield, which moves opposite to price, fell 5 basis points to 2.527%, while the 30-year bond 30_YEAR -1.16% yield fell 3.5 basis points to 3.593%, and the 5-year note 5_YEAR -3.09% yield fell 4 basis points to 1.357%.
Bonds have been rallying alongside global markets this week as they recovered from a sharp selloff in May and June, which sent the 10-year note yield to its highest level since August 2011. Jittery investors tried to adjust to indications that the Federal Reserve may inch its way out of its bond-purchase program in coming months.
Fed Chairman Ben Bernanke sought to calm markets on Wednesday by emphasizing the disconnect between winding down its bond purchases, often described as tapering, and a rise in short-term interest rates.
“He wasn’t really saying anything different. It just came down to emphasis, and distinguishing between tapering and raising rates,” said Matt Duch, portfolio manager at Calvert Investments, who noted that the chairman’s remarks were a key factor in calming the markets.
Given the recent selloff driven by economic news and technical moves, Treasurys are likely to be range-bound in the near term, Duch said.
Data releases did little to change the dovish tone in the markets.
The producer-price index, a gauge of inflationary pressure, jumped 0.8% in June as the cost of gas spiked, the Labor Department said Friday. That surpassed the expectations of MarketWatch-surveyed economists, who anticipated a 0.5% increase, though it did little to change market expectations for inflation. Core PPI, which excludes volatile food and energy costs, rose a meager 0.2%.
The University of Michigan and Thomson Reuters consumer-sentiment index fell to 83.9 in July from a final reading of 84.1 in June. Economists had expected the consumer gauge to remain level.
U.S. stocks were flat in morning trade. Gold slipped and the dollar rose.
In Portugal, 10-year government bond yields once again spiked 72 basis points to 7.693%, according to Tradeweb. The move followed a decision by international leaders to push back a review of the struggling nation’s bailout program given recent political instability.
Ben Eisen is a MarketWatch reporter based in New York.
