By Joseph Adinolfi, MarketWatch
NEW YORK (MarketWatch)-- The 10-year and 30-year Treasury bond
yields trended lower Friday, but remained up 4.50% and 1.10% for
the week, as portfolio managers' end-of-the-year position
adjustments were exaggerated by an illiquid market.
Investors rushed into stocks this week after Federal Reserve
Chairwoman Janet Yellen hinted that the central bank would be
careful to raise interest rates gradually in 2015, restoring
investor confidence in risky assets.
The yield curve continued a steepening trend that has been in
place for most of 2014, said Donald Ellenberger, senior portfolio
manager and head of multi-sector strategies. The spread between the
two-year and 10-year yield declined by five basis points to 152
basis points.
Ellenberger added that small position adjustments had an outsize
effect on the market Friday.
"We could easily attribute today's price activity to random
buying and selling in a fairly illiquid market," Ellenberger
said.
Oil found its footing Friday, as West Texas Intermediate crude
(CLF5) closed 6.6% higher at $57.95, which attracted investors away
from the bond market.
The 30-year yield (30_YEAR) was down 4.8 basis point to 2.764%,
according to data from Tradeweb. 10-year yields (10_YEAR) were down
3.3 basis points to 2.171%. Two-year yields (2_YEAR) added 1.7
basis points to 0.650%. Five-year yields (5_YEAR) were down 0.4
basis point to 1.654%.
Bond yields move inversely to prices.
U.S. stocks recorded their best week since October, with the
S&P 500 (SPX) up 3.4% to 2,070.6 on the week. And the Dow Jones
Industrial Average (DJI) rose 3% to 17,804.
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