Treasuries Finish Mostly Higher
It was an "inside day" to round out the week for an abbreviated Friday session. Though Treasuries mostly finished higher on a surprising downward revision of Q1 GDP to 5.6%, well below median forecasts of 6.25%, any upside momentum was usurped by the fast approaching long Memorial Day weekend.
Later in the morning, news that April New Home Sales continued to defy gravity, gaining 1% to 915,000, also took some of the starch out of Treasuries.
Stocks continued to flounder after Goldman downgraded the chip sector after its winning streak, but this provided very little lift under the wings of bonds. The long-end of the curve initially outperformed ahead of the Jun option expiry and given $27 billion in two-year supply looming next week. The June bond closed up 7/32 at 101-16, while the two-year note and 30-year bond spread finished unchanged at +244 basis points.
Though prices along the cash curve closed virtually unchanged, there was a small bit of underperformance in the belly. The dollar rounded out the week on the back foot and could face another round of BoJ intervention on Monday. The poor trade-weighted finish below 113 by the dollar index may have weighed on both asset classes.