Treasuries Rebound Strongly In Reaction To Brexit Vote

(RTTNews) - After trending lower over the past few sessions, treasuries showed a substantial move back to the upside during trading on Friday.

Bond prices moved sharply higher in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged by 16 basis points to 1.579 percent.

The rally by treasuries came on the heels of the U.K.'s surprise vote in favor of leaving the European Union on Thursday.

In a referendum, the British people voted 52 percent to 48 percent to leave the EU amid substantial turnout of more than 72 percent.

While the so-called Brexit had been discussed intensely across the world in the run up to the poll, the actual decision to leave came as a surprise, sending the British pound to a 31-year low. Global markets were caught off guard and plummeted during the day.

Among the casualties of the Brexit was Prime Minister David Cameron, who announced on Friday that he will step down in October.

Cameron, who had strongly called for a "Remain" vote, said the British people voted to leave the EU and their will must be respected.

The Brexit vote largely overshadowed the day's U.S. economic data, including a report from the Commerce Department showing a bigger than expected drop in durable goods orders in the month of May.

The Commerce Department said durable goods orders fell by 2.2 percent in May after jumping by 3.3 percent in April. Economists had expected orders to drop by 0.7 percent.

Excluding orders for transportation equipment, durable goods orders edged down by just 0.3 percent after rising by 0.5 percent in the previous month.

A separate report from the University of Michigan showed a modest deterioration in consumer sentiment in the month of June.

Reaction to the Brexit vote may continue to impact trading next week, although traders will also be presented with reports on consumer confidence, personal income, and manufacturing activity.