U.S. Treasury yields were lower on Friday as investors weighed this week’s key data and considered the state of the economy.
At 3:15 a.m. ET, the yield on the 10-year Treasury was down by over two basis points to 3.9035%, hovering around the 3.9% level it had crossed Thursday. The 2-year Treasury yield was last more than one basis point lower at 4.0853%.
Yields and prices move in opposite directions. One basis point equals 0.01%.
Yields had jumped on Thursday after U.S. retail sales figures for July came in much higher than expected, jumping 1% in the month. Economists polled by Dow Jones has been expecting a 0.3% increase.
The data suggested that consumer spending is robust, and therefore eased fears of a recession or economic slowdown. Weekly initial jobless claims also came in below expectations on Thursday, calming concerns about the state of the labor market.
Jitters about the labor market and wider economy surged earlier this month after July’s jobs report was weaker than expected. It also prompted questions about whether the Federal Reserve should have already cut interest rates.
A rate cut in September, when the central bank next meets, was last firmly priced in by markets, boosted by inflation data released this week. The consumer price index rose 0.2% on a monthly basis in July, as expected, and was up 2.9% from a year earlier, which was less than forecast.
Investors are now looking ahead to comments from Federal Reserve officials in the coming weeks to gauge their view on the economy and interest rates, including at next week’s Jackson Hole symposium.
On Friday, investors will also be watching for the latest building permit and housing starts data, as well as fresh consumer sentiment insights.
