FX.co ★ Treasuries Close Roughly Flat After Seeing Initial Strength

Treasuries struggled to maintain their initial upward momentum and demonstrated a lack of clear direction throughout Friday’s trading session, closing the day approximately flat.

Bond prices retracted from their early highs and hovered near the unchanged mark for the rest of the day. Consequently, the yield on the benchmark ten-year note, which inversely correlates with its price, edged up by less than one basis point to 4.257 percent.

This tepid performance in treasuries occurred as traders evaluated the latest U.S. economic data. A report from Standard & Poor's revealed that the S&P Global Flash US Composite PMI rose marginally to 54.6 in June from 54.5 in May, hitting its highest level since April 2022.

The service sector drove June’s expansion, with the Flash US Services Business Activity Index increasing to a 26-month high of 55.1 in June from 54.8 in May. Additionally, the Flash US Manufacturing PMI inched up to 51.7 in June from 51.3 in May, according to S&P.

In another report, the National Association of Realtors indicated that existing home sales in the U.S. declined in May, largely aligning with economist expectations.

The report detailed that existing home sales fell by 0.7 percent to an annual rate of 4.11 million in May, following a 1.9 percent decrease to an annual rate of 4.14 million in April. Economists had anticipated a drop to a rate of 4.10 million.

The ongoing decline in existing home sales was attributed to the median existing-home price hitting a record high of $419,300 in May, an increase of 5.8 percent from $396,500 a year earlier.

"Home prices reaching new highs are creating a wider divide between property owners and prospective first-time buyers," noted NAR Chief Economist Lawrence Yun.

"The mortgage payment for a typical home today is more than double that of homes purchased before 2020," he added. "Nevertheless, first-time buyers in the market recognize the long-term benefits of homeownership."

A separate report from the Conference Board indicated its Leading Economic Index for the U.S. dropped more than anticipated in May.

The Conference Board reported that its Leading Economic Index decreased by 0.5 percent in May, following a 0.6 percent decline in April. Economists had forecasted a smaller dip of 0.3 percent.

Next week, the Commerce Department’s report on personal income and spending will likely be a central focus, particularly since it includes inflation metrics preferred by the Federal Reserve.

Additional reports on new home sales, consumer confidence, durable goods orders, and pending home sales are also expected to garner attention in the upcoming week.