FX.co ★ Treasuries Show Modest Move Back To The Upside

Following declines over the past two trading sessions, Treasury markets saw a slight upward trend on Friday. Initially, bond prices experienced an uptick that dwindled as the day progressed, though they stayed positive overall. Consequently, the yield on the benchmark ten-year note, which inversely reacts to its price, fell by 2.2 basis points to settle at 4.410 percent.

This minor recovery in Treasuries was largely influenced by revised figures from the University of Michigan, indicating a less optimistic improvement in U.S. consumer sentiment for November than initially estimated. The consumer sentiment index for the month was adjusted downward to 71.8 from the earlier reported 73.0.

Economists were surprised by the downward revision, as it was anticipated to rise to 73.7. However, the index remained above October's final figure of 70.5 and is at its highest since April, when it reached 77.2.

"Post-election interviews registered 1.3 points lower than the pre-election figures, moderating the earlier improvement," commented Joanne Hsu, Director of Surveys of Consumers. She further noted, "This month saw a surge in the expectations index for Republicans, while it declined for Democrats, highlighting the divergent expectations of the two groups regarding Trump's economic policies."

Regarding inflation expectations, the University of Michigan reported a slight decline in year-ahead inflation expectations, reducing to 2.6 percent in November from 2.7 percent in October, marking its lowest since December 2020. Conversely, long-term inflation expectations increased to 3.2 percent in November from 3.0 percent in October, alongside a hike in long-term inflation uncertainty.

Next week's trading activities may experience a slowdown due to the Thanksgiving Day holiday on Thursday. Nonetheless, traders are expected to closely monitor the latest U.S. economic updates. The focus will likely be on the Federal Reserve's preferred inflation measures, with reports on durable goods orders, new home sales, and weekly jobless claims also drawing interest. Moreover, the minutes from the latest Federal Reserve meeting are set to capture attention.