Plus   Neg

Treasuries Show Significant Move To The Downside

Treasuries showed a notable move to the downside during trading on Friday after ending the previous session roughly flat.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 6.9 basis points to 2.40 percent.

The upward move by treasuries came as traders continued to digest the details of the Senate Republican version of tax reform legislation.

The Senate bill includes some significant differences from the House version, including a delay in the implementation of a cut in the corporate tax rate.

While the Senate version still reduces the corporate tax rate to 20 percent from 35 percent, the new rate would not take effect until 2019. The House bill would start the 20 percent rate next year.

A number of other differences related to issues such as deductions and the estate tax have raised some questions about the outlook for tax reform.

House Republicans could pass their version as early as next week, although it remains to be seen if GOP lawmakers can overcome the differences in the two bills to get legislation to the president's desk.

On the economic front, a report from the University of Michigan showed a bigger than expected pullback in consumer sentiment in the month of November.

The report said the preliminary reading on the consumer sentiment index for November came in at 97.8 compared to the final October reading of 100.7. Economists had expected the index to dip to 100.0.

The bigger than expected decrease by the consumer sentiment index came after it surged up to a thirteen-year high in October.

Next week's trading may be impacted by the latest economic data, with reports on producer and consumer prices, retail sales, industrial production, and housing starts likely to attract considerable attention.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT