Ten-Year Yield Slumps Below 4% Amid Stagflation Concerns

(RTTNews) - Treasuries moved sharply higher during trading on Friday, extending the upward move seen over the course of the previous session.

Bond prices surged in early trading and saw further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 5.5 basis points to 3.962 percent.

The ten-year yield added to the 3.1 basis point drop seen on Thursday, closing below 4 percent for the first time in three months and hitting a four-month closing low.

The continued strength among treasuries came following the release of a Labor Department report showing producer prices in the U.S. increased by more than expected in the month of January.

The report said the Labor Department's producer price index for final demand climbed by 0.5 percent in January after rising by a downwardly revised 0.4 percent in December.

Economists had expected producer prices to rise by 0.3 percent compared to the 0.5 percent increase originally reported for the previous month.

While the bigger than expected monthly increase by producer increased confidence the Federal Reserve will leave interest rates unchanged in the near future, concerns about a period of stagflation due to AI-related layoffs may have increased bonds' safe haven appeal.

Treasuries may also have benefitted from a sell-off by stocks on Wall Street, with the Dow tumbling to its lowest intraday level in almost a month.

The Labor Department's monthly jobs report is likely to be in the spotlight next week, although reports on retail sales and manufacturing and service sector activity may also attract attention.