The Day Ahead: Treasuries Firm, Equities Reverse as Week Ends

Treasuries had been strengthening Friday morning on the back of uncertain global markets.

The benchmark 10-year yield is at 3.17% in early trading, basically on par with Thursday's close. The two year yield is flat at 0.53% and the 30-year yield is a touch firmer at 4.3133%.  MBS are pacing TSYs into the mild rally with FNCL 4.5's up a tick on the day at 103-11 and 4.0's unchanged at 100-01.  Bond markets have been trending weaker since opening slightly improved.  Current coupon spreads vs 10's are a hair under one basis point tighter from yesterday's closing levels.

"Global equities are mixed heading into the weekend, weighed by this week's stream of weak U.S. data weigh and after the Bank of Japan left rates unchanged at their latest policy meeting," said economists at BMO Capital Markets.

They noted the Euro fell this morning following a report from Germany's Bundesbank said "growth is likely to ease somewhat in the foreseeable future" after an 
"explosive" first quarter. It said the economy's 1.5% Q1 growth rate "considerably overstates the underlying economic momentum."

U.S. equity futures are trading downwards with the S&P 500 set to open 4 points lower at 1,337.70 and the Dow looking to start 37 points off at 12,554. 

Not much guidance was offered from the Asian session, where the Nikkei finished 0.1% lower, the Hang Seng rose 0.2%, and China's CSI 300 was flat.

Oil prices rose 0.27% overnight to $98.73, while gold prices moved up 0.29% to $1,496.80.

No significant economic data is scheduled for release though some Fed-Speak is expected from NY Fed's Dudley.  Today is also a monthly options expiration which, amid a lack of scheduled economic data, can make for a higher degree of volatility especially when distorted by variations in volume and liquidity.