Treasuries Give Back Ground Amid Renewed Interest Rate Concerns

(RTTNews) - After moving sharply higher over the course of the two previous sessions, treasuries gave back ground during trading on Friday.

Bond prices came under pressure in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.6 basis points to 3.463 percent.

Renewed concerns about the outlook for interest rates weighed on treasuries following the release of a report from the University of Michigan showing an increase in long-term inflation expectations.

The report said five-year inflation expectations rose to 3.2 percent in May from 3.0 percent in April, reaching their highest reading since 2011.

Meanwhile, the report said year-ahead inflation expectations receded slightly to 4.5 percent in May after spiking to 4.6 percent in April.

The University of Michigan also said its consumer sentiment index tumbled to 57.7 in May from 63.5 in April, while economists had expected the index to edge down to 63.0.

With the much bigger than expected decrease, the consumer sentiment index slumped to its lowest level since hitting 56.8 last November.

Traders were also reacting to remarks by Federal Reserve Governor Michelle Bowman, who said interest rates would need to remain sufficiently restrictive for some time to bring inflation down and create conditions that will support a sustainably strong labor market.

The Labor Department also released a report showing U.S. import prices increased by slightly more than expected in the month of April.

Next week's trading may be impacted by reaction to the latest U.S. economic data, including reports on retail sales, industrial production, housing starts and existing home sales.