Investors bought both U.S. stocks and government bonds on Friday, with major stock indexes on track for fresh highs. Photo: brian snyder/Reuters
U.S. government bond prices rose Friday but still capped off a fourth week of declines as investors turned to riskier assets like stocks ahead of next week’s Federal Reserve meeting.
The yield on the 10-year Treasury fell to 3.068% Friday from 3.076% Thursday. Yields rise as bond prices fall.
Yields rose in the beginning of the week, reaching the highest levels in months as investors assessed a growing supply of corporate and government bonds and a solid U.S. economic outlook.
Treasury yields then pared some of their gains on Thursday as the prospect of higher returns ignited new demand, according to some analysts. Investors bought both U.S. stocks and government bonds on Friday, with major stock indexes hovering near highs, the latest sign of continuing investor optimism about the U.S. economy.
Geopolitical concerns helped curtailed some of the selling in Treasurys this week. British Prime Minister Theresa May warned Friday that Brexit talks had hit a logjam, calling on European leaders to propound new proposals.
The Brexit situation marked a “warning beacon that things are still happening below the surface even though stock markets are in a state of reasonable euphoria,” said Jim Vogel, an interest-rates strategist at FTN Financial.
Investors will be closely watching the Federal Reserve meeting next week, where many expect the central bank to raise interest rates. The yield on the two-year Treasury note, which tends to be more sensitive to the path of interest rates, hit the highest mark in over a decade this week.
Analysts are also closely tracking talks between the U.S. and China on trade. Easing trade frictions have helped spur yield gains in recent sessions, pushing investors toward riskier assets.
Write to Gunjan Banerji at [email protected]