US Treasury prices rose on Friday, ending another strong week, as ravenous appetite for government debt eclipsed encouraging economic data and this week's gains on Wall Street. Nagging doubts over a sustained US economic recovery, plus a general view of low inflation, underpinned the unrelenting demand for long-dated bonds, analysts said.
A late wave of profit-taking pounded Treasury prices off their session highs, but it was not enough to sour the market. analysts said. "We had a pretty good week. People are just taking some money off the table ahead of the weekend," said Ira Jersey, an interest rate strategist at RBC Capital Markets in New York.
Benchmark yields, which move inversely to their prices, fell for a fifth straight week. The two-year note yield ended at its lowest since May following remarks from Federal Reserve officials signalling the US central bank will keep short-term rates near zero in the foreseeable future. Benchmark 10-year notes rose 5/32 in price for a 3.34 percent yield, down 2 basis points from late Thursday and 10 basis points lower than a week ago.
Thirty-year Treasury bonds gained 15/32 to yield 4.17 percent, down 3 basis points from late Thursday and 10 basis points lower than a week earlier. The strong bidding for this week's $70 billion in supply, punctuated by a surprisingly robust 30-year bond auction on Thursday, also galvanized the market's bullish tone.
This week's debt supply was "a test of the market" which stood up well, said Brian Brennan, a portfolio manager at T. Rowe Price in Baltimore. Bonds have de-coupled from their inverse relationship with equities in recent days, as investors have been scooping up low-risk government debt, as well as riskier assets including stocks and corporate bonds.
Major Wall Street indexes snapped their five-day winning streak on Friday as weaker energy shares overshadowed an upbeat outlook from shipping company FedEx Corp and encouraging consumer data from Reuters and University of Michigan. The Reuters/University of Michigan index of consumer sentiment rose in early September to 70.2, the highest since June, from 65.7 in August. Among short-dated maturities, two-year notes were flat in price to yield 0.90 percent, down 4 basis points on the week.