U.S. government debt prices fell Friday morning as traders continued to weigh the prospects of a U.S. recession following a a second consecutive quarter of economic contraction.
At around 6:10 a.m. ET, the yield on the benchmark 10-year Treasury note traded 3 basis points higher at 2.71%, and the yield on the 30-year Treasury bond climbed to 3.076%. Yields move inversely to prices.
The latest U.S. growth reading showed the economy contracted by 0.9%, in what is seen as recession sign.
“The Q2 GDP contraction is fueling fears that the US economy is in recession,” wrote strategists at BCA Research. “Regardless of whether this is indeed the case … there are two key questions that are more relevant for investors. “First, what are the implications for Fed policy? And second, what are the implications for financial markets?”
“On the first point, one clear difference this time around versus previous downturns is the robustness of the labor market,” they added. “In terms of implications for financial markets, the fact that US stocks rallied on Thursday following the disappointing GDP print suggests that equity markets have already discounted the risk of recession.”
Looking ahead to Friday, investors will watch out for new consumer spending numbers and personal income figures due at 8:30 am ET.