Longer-term yields rise with stock gains

Longer-term US Treasury yields rose on Friday as traders moved into stocks, but caution held back shorter-term rates and steepened the yield curve.

The benchmark 10-year yield was up 2.1 basis points at 0.5625pc in morning trading.

The gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at 44 basis points, about a basis point above Thursday's close and well above the 40 basis point level it touched early Friday morning.

The risk-on movement came as stock indexes opened higher based on strong earnings from top technology companies.

But the two-year US Treasury yield, which typically moves in step with interest rate expectations, was almost unchanged at 0.1191pc and remained close to its all-time low of 0.105pc reached on May 8.

The economy as a whole is unlikely to improve until public health issues stemming from the COVID-19 pandemic are resolved, said Raymond James market strategist Ellis Phifer.

Early signs of an economic comeback proved premature as virus cases have continued rise and kept people at home.

"That's bad for the economy since we're consumer driven," Phifer said. The Commerce Department said on Friday that consumer spending, which accounts for more than two-thirds of US economic activity, rose 5.6pc last month after a record 8.5pc jump in May as more businesses reopened.

The data was included in Thursday's advance gross domestic product report for the second quarter, which showed the economy shrinking at a record 32.9pc annualized rate as consumer spending tanked at a historic 34.6pc pace.

The United States leads the world in COVID-related fatalities with more than 150,000 in five months.

In Washington negotiations over another coronavirus relief bill continued and the No. 2 Democrat in the US House of Representatives said a federal jobless benefit was set to expire on Friday with no sign of a deal.