Treasuries Weaken Slightly For Friday`s Close, Friday, July 27, 2007 4:12:39 PM
The bond market was unable prolong its 4 day winning streak, closing slightly down Friday. Yields rose in the morning hours, after a better-than-expected report on gross domestic product gave investors hope that the economy was adjusting to problems in the housing market. However, housing woes combined with increasing concern about credit availability overshadowed the bright spot of the GDP report.For the week the yield on the benchmark 10-year note plummeted 17.9 basis points. Investors are looking ahead to next week, when a slew of reports will help determine if Wall Street is merely experiencing a hiccup in a rally or on track for a correction. The Dow closed down over 200 points Friday in its third consecutive loss.
On Friday, the yield on the benchmark 10-year note closed down 1.3 basis points to 4.79%.Strong economic growth in the second quarter was revealed in the report on gross domestic product released this morning. For the second quarter, GDP gained at a 3.4% annual rate. Analysts had expected a growth rate of 3.2%. Increased business spending was a major component of the increased growth. Gross domestic product measures the value of all goods and services produced in the United States. It is considered the best measure of the country`s economic well being.
Last week investors grew increasingly concerned that the strong economy would force the Fed to raise interest rates. Those fears were reversed this week after worse than expected data about the housing market was released, resulting in fears of a weak economy. The report released this morning tempers both concerns, with an increase in the growth rate coming as inflation moderated. An inflation gauge showed `core` prices, those excluding food and energy, rose a mere 1.4 percent in the second quarter. That was down one percent from the 2.4 percent pace in the first quarter, making it the smallest increase in four years.
Also released this morning was a report on consumer sentiment. The report, released twice a month by the University of Michigan, revealed that consumer sentiment came in slightly below expectations. The final reading for July was 90.4, a touch below the consensus of 91.2. Sentiment bounced back from June`s final reading of 85.3, a 10-month low. It was the highest reading since February, when it came in at 91.3.
Investors are looking forward to the wealth of information which will be made available next week. The information comes in the form of market-moving economic reports, including personal income, the ISM manufacturing index, and employment situation. With the market unable to gain traction from the positive GDP report, investors are hoping the reports will provide a clear direction.
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posted by Kalin Tasev @ 1:55 PM
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