Treasuries Come Under Pressure Going Into The Close Of Trading

Treasuries showed a lack of direction for much of the trading day on Friday before coming under pressure going into the close.

Bond prices pulled back sharply late in the day, ending the session firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.5 basis points to 0.654 percent.

The late-day pullback by treasuries came as the Federal Reserve revealed plans to slow the pace of its bond purchases.

According to a report from CNBC, the Fed said it buy securities at a pace of about $15 billion a day, slower than around $30 billion a day this week.

The Fed announced extensive new measures to support the economy last month, including an unlimited expansion of its asset purchases.

The lower close by treasuries also came as stocks moved higher following a report of promising early data related to a potential coronavirus treatment from Gilead Sciences (GILD).

Healthcare publication STAT News reported that the experimental Covid-19 treatment remdesivir is showing promise in a Chicago clinical trial.

Investors also seem to be reacting positively to President Donald Trump’s plans for a gradual re-opening of the U.S. economy.

“We are not opening all at once, but one careful step at a time,” Trump said at the coronavirus task force press briefing Thursday as the White House outlined a three-phase approach to gradually bring back parts of public life.

Meanwhile, traders shrugged off a report from the Conference Board showing its index of leading U.S. economic indicators registered the largest decline in its 60-year history in the month of March.

The Conference Board said its leading economic index plunged by 6.7 percent in March after dipping by a revised 0.2 percent in February.

Economists had expected the index to plummet by 7.0 percent compared to the 0.1 percent uptick originally reported for the previous month.

“The unprecedented and sudden deterioration was broad based, with the largest negative contributions coming from initial claims for unemployment insurance and stock prices,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

He added, “The sharp drop in the LEI reflects the sudden halting in business activity as a result of the global pandemic and suggests the US economy will be facing a very deep contraction.”

News on the coronavirus front is likely to remain in focus next week, overshadowing reports on new and existing home sales, durable goods orders, and consumer sentiment.

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