Treasurys Move Lower as Earnings Sap Safety Bid
U.S. Treasurys prices fell Friday as better-than-expected bank sector earnings prompted investors to turn away from lower-risk debt.
Also, mortgage finance giant Freddie Macissued preliminary filings with the Securities and Exchange Commission, a step toward raising $5.5 billion in capital, which it had promised its regulator. Shares of Freddie Mac and rival Fannie Maewere up a third consecutive day, by 14.7 percent and 24 percent, respectively.
"There's a little bit of relief on the risk side," said Gary Bartlett, managing director and chief investment officer at Aberdeen Asset Management in Philadelphia. "The stock market has been firmer for the last few days, coming a few steps back from the edge of the cliff."
News that Freddie Mac was taking steps to raise capital made investors willing to tolerate a bit more risk, said Georges Yared, chief investment officer of GameChanger Investing in Minneapolis.
"Fannie and Freddie will survive so a bit of cash is moving out of Treasurys," he said.
Benchmark 10-year Treasury notes fell 25/32 in price, while their yields, which move inversely to price, rose to 4.09 percent from 3.99 percent late Thursday.
John Spinello, chief fixed-income technical strategist at Jefferies & Co. in New York, said he expected 10-year yields to reach 4.15 percent "at some point in the next week."
Position adjustments and stability as the 10-year yield approaches technical support at 4.06 percent to 4.08 percent should characterize trade going into the weekend, Spinello said. Resistance is in the area of 3.945 percent to 3.91 percent, the mid-point of the three-day rate rise, he said.
At midday, two-year notes were down 7/32, their yields up to 2.61 percent from 2.49 percent late Thursday.
Five-year Treasury notes fell 18/32, their yields rising to 3.40 percent from 3.28 percent Thursday.
Thirty-year bonds fell 29/32 in price, their yields rising to 4.67 percent from 4.61 percent Thursday.