Treasuries Finish Choppy Trading Day Little Changed

After moving notably higher in the previous session, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices bounced back and forth across the unchanged line before closing little changed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.536 percent.

The slight decrease on the day still pulled the ten-year yield down to its lowest closing level in well over four months.

The choppy trading on the day came as traders kept an eye on developments in Washington, where negotiations over a new coronavirus stimulus package have seemingly stalled.

With the Republican-controlled Senate adjourning for the weekend on Thursday, a $600 weekly federal unemployment benefit is set to expire at the end of the day.

Democrats rejected a temporary extension of the jobless benefit, with Senate Minority Leader Chuck Schumer claiming a one-week extension “can’t be implemented in time.”

Lawmakers appear at an impasse as the attempt to reach a compromise between a $1 trillion GOP relief proposal and the $3.4 trillion bill passed by the Democratic-controlled House in May.

On the U.S. economic front, the Commerce Department released report showing personal income slumped by more than expected in the month of June, although the report also showed another substantial increase in personal spending.

The Commerce Department said personal income tumbled by 1.1 percent in June after plunging by a downwardly revised 4.4 percent in May.

Economists had expected personal income to decrease by 0.5 percent compared to the 4.2 percent nosedive originally reported for the previous month.

Meanwhile, the report said personal spending surged up by 5.6 percent in June after skyrocketing by an upwardly revised 8.5 percent in May.

Personal spending had been expected to jump by 5.5 percent compared to the 8.2 percent spike originally reported for the previous month.

A separate report from the University of Michigan showed consumer sentiment deteriorated by more than initially estimated in the month of July.

The report said the consumer sentiment index for July was downwardly revised to 72.5 from the preliminary reading of 73.2. The index is down from 78.1 in June and below economist estimates for a reading of 73.0.

“Consumer sentiment sank further in late July due to the continued resurgence of the coronavirus,” said Surveys of Consumers chief economist Richard Curtin.

Developments in Washington are likely to remain in focus next week, although traders are also likely to keep a close eye on the Labor Department’s monthly jobs report.

Reports on manufacturing and service sector activity, construction spending, factory orders, the U.S. trade deficit, and weekly jobless claims may also attract some attention.

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