Treasuries Stage Recovery Attempt But Still Close Lower

(RTTNews) - After coming under pressure early in the session, treasuries regained ground over the course of the trading day on Friday.

Bond prices bounced back near the unchanged in late morning trading but moved back to the downside. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.4 basis points to 3.692 percent.

The ten-year yield closed higher for the sixth consecutive session, ending the day at its highest closing level in over two months.

The recovery attempt by treasuries came as Republican negotiators walked out of a meeting over raising the U.S. debt ceiling, offsetting recent optimism about an impending deal.

"Until people are willing to have reasonable conversations about how you can actually move forward and do the right thing, then we're not gonna sit here and talk to ourselves," Rep. Garret Graves, R-La., told reporters.

Graves, who is House Speaker Kevin McCarthy's, R-Calif., lead negotiator on the debt limit, added, "We've decided to press pause, because it's just not productive."

Even with the U.S. potentially facing default as soon as June 1st, Graves said he did not know if talks would resume this weekend.

The latest developments come after McCarthy and President Joe Biden had both recently expressed optimism about reaching an agreement.

Buying interest once again receded as the day progressed, however, as traders still expect lawmakers to eventually reach a debt ceiling deal.

The debt ceiling news largely overshadowed remarks by Federal Reserve Chair Jerome Powell, who participated in a panel before a monetary policy conference earlier in the day.

Citing recent turmoil in the banking sector, Powell suggested interest rates "may not need to rise as much as it would have otherwise to achieve our goals."

However, Powell noted inflation remains too high and stressed the Fed would be "steadfast" in pursuit of its goal of bringing inflation down to its 2 percent target.

Developments regarding the debt ceiling negotiations are likely to remain in focus next week, while traders are also likely to keep an eye on reports on new home sales, durable goods orders and personal income and spending as well as the minutes of the latest Fed meeting.