U.S. Treasury yields declined on Friday as investors digested the latest gross domestic product figures and awaited the release of key data that could impact the Federal Reserve’s upcoming policy decision.
As of 4 a.m. ET, the 10-year Treasury was at 3.473% after falling by over five basis points. The yield on the 2-year Treasury was last down by seven basis points to 4.027%.
Yields and prices move in opposite directions and one basis point is equivalent to 0.01%.
Treasury yields had jumped on Thursday, with the 2-year Treasury gaining over 15 basis points, despite the latest GDP figures indicating slower than expected economic growth in the first quarter.
Thursday’s report showed that the GDP rose by 1.1% at an annualized pace, falling short of the 2% increase previously expected by economists surveyed by Dow Jones.
Meanwhile, the personal consumption expenditure index, which is one of the Federal Reserve’s preferred inflation gauges, came in at 4.2% on a quarterly basis. This was above the 3.7% for the previous quarter.
The monthly reading of the core PCE for March is expected to be released Friday. Economists are expecting it to have risen by 0.3% according to Dow Jones, which would be in line with February’s increase.
Monthly personal income and spending figures are also due Friday. Investors will be watching the data closely as it could impact the Fed’s next policy moves.
The central bank is set to meet next week and is expected to hike interest rates by a further 25 basis points. Investors are also hoping for guidance about how long rates will remain elevated and when rate cuts can potentially be expected.
Elsewhere, Germany’s GDP stagnated in the first quarter, falling short of expectations, and France reported 0.2% GDP growth on Friday.
