| Old conundrum, new twist
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| Inverted or flat, the yield curve points to a weaker Federal Reserve, not a downturn. (Full story)
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NEW YORK (CNNMoney.com) -
Treasury prices jumped Friday, flattening the spread between long and short yields, after a report offered signs of a cooling housing market.
The dollar was mixed against the euro and the yen.
The benchmark 10-year note gained 13/32 to 100-30/32, yielding 4.37 percent, down from 4.43 from late Thursday. The 30-year bond gained 1 point to 112-11/32 to yield 4.54 percent, down from 4.61 in the previous session. Bond prices and yields move in opposite directions.
In shorter-dated debt, the two-year note gained one tick, yielding 4.36 percent. The five-year note was up 8/32, yielding 4.31 percent.
Bonds rallied during a shortened trading session after a report showed new home sales tumbled 11 percent in November. (Full story)
Bond markets closed early Friday because of the Christmas holiday.
"The [housing] data must be considered confirmation of a clear slowing in the housing sector ... and is then solidly bond friendly and dollar negative," Alan Ruskin, research director at 4CAST Ltd. in New York, told Reuters.
Long-range Treasury prices, which are influenced by the market's long-term inflation outlook, jumped on signs of slower economic growth, pushing down corresponding yields and further narrowing the spread between long and short rates.
Lately in the bond market, low inflation concerns have kept longer-term bond yields low while yields on shorter maturities have risen in tandem with the Fed's rate hikes.
Wall Street has kept a close eye on what's going on in the bond market because the past two recessions have been preceded by a so-called yield curve inversion, which occurs when short-term rates exceed long rates.
In other economic news, durable goods orders gained 4.4 percent after economists had predicted a 1.1 percent increase, though most of that was from aircraft orders. (Full story)
The University of Michigan's measure of consumer sentiment rose to 91.5 in December from 81.6 last month.
In currency trading, the dollar gained against the euro and drifted against the yen.
The euro bought $1.1859, down from $1.1885 late Thursday in New York. The dollar bought ¥116.34, down from ¥116.60 in the previous session.
-- from staff and wire reports
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