By Sam Goldfarb
U.S. government bond prices edged lower Thursday after new data suggested consumers are feeling better about the economy than economists had expected.
In recent trading, the yield on the benchmark 10-year U.S. Treasury note was 0.641%, according to Tradeweb, compared with 0.617% Thursday.
Yields, which rise when bond prices fall, climbed after the University of Michigan reported that its index of consumer sentiment rose to 73.7 in the three weeks ending May 13, from 71.8 for the previous four weeks. Economists surveyed by The Wall Street Journal had expected a reading of 65.0.
The increase in yields came even after another report showed a record decline in retail sales last month and as stocks fell on concerns of renewed trade tensions between the U.S. and China.
Treasury yields tend to rise and fall along with expectations for economic growth and inflation, in part because higher inflation erodes the purchasing power of bonds' fixed payments.
Friday's move hardly amounted to a surge in optimism. Despite the uptick, yields remain near the all-time lows they reached in March, reflecting a dismal economic outlook as the world struggles to respond to the coronavirus pandemic.
Elsewhere in the credit market, corporate bond exchange-traded funds were mixed after the Federal Reserve disclosed late Thursday it had bought $305 million in such ETFs in the week ended on Wednesday after starting the purchases on Tuesday.
BlackRock's iShares U.S. investment-grade corporate bond ETF was recently up around 0.2% while its high-yield ETF was down roughly 0.1%.
As of Thursday, the average extra yield investors demanded to hold investment-grade corporate bonds over Treasurys was 2.12 percentage points, unchanged from the end of last week.
The Fed is buying ETFs through its newly established Secondary Market Corporate Credit Facility, which is also authorized to buy individual bonds. The central bank has said it would start buying individual bonds soon, a move that would allow it to purchase a much larger amount of corporate debt than is possible from only buying ETFs.
Write to Sam Goldfarb at email@example.com
Corrections & Amplifications
This item was corrected at 5:21 p.m. ET to show that the Federal Reserve disclosed Thursday it had bought $305 million of corporate bond exchange-traded funds in the week ended on Wednesday. An earlier version misstated the amount as $305 billion.