Weak PCE Numbers Help Keep Yields Rangebound

Treasuries saw modest weakness Friday, with 10-Yr yields rising to firmly within the middle of the week's (1.5872-1.7051%) range after rebounding from 1.5% handles on Wednesday and Thursday.

• Curve steepening took a bit of a breather, with 5s30s retracing Thursday's sharp post-7Y auction rise. Indeed, the short and long end outperformed on the curve 2Y +0.2bps, 5Y +2.0bps, 10Y +2.7bps, 30Y +1.0bps.
• With no supply and limited Fed speaker activity (Philly Fed Pres Harker said on BBG TV that rising market yields were a "good sign because it shows optimism"), focus was on data.
• Tsys headed higher after personal income/spending data came in line for Feb, but with downside revisions to PCE inflation figures. Trimmed mean PCE inflation figures released later in the afternoon by the Dallas Fed confirmed that price pressures remain very weak. Less noticed, wholesale inventories data came in weak, leading to downward revisions to Q1 GDP 'nowcasts'.
• Even so, long-end breakevens led the charge at the long end, hitting new cycle highs for 10s as oil prices picked up pace.
• Next week's highlights are largely on the data side, with nonfarm payrolls Friday, and MNI Chicago PMI and ISM Manufacturing PMI providing a status check on economic activity.