Article Highlights

  • Bannon's exit lifts stocks, reduces bond demand
  • Doubts on efforts to lift U.S. economy underpin bids for bonds
  • Finland attack heightens investor unease before weekend
  • Consumer sentiment rebounds in early August -U Mich
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U.S. Treasury yields were little changed on Friday as the exit of senior White House adviser Stephen Bannon, known for his economic nationalist views, revived the appetite for stocks and reduced it for lower-yielding bonds.

Some investors and corporate executives have worried about Bannon’s far-right political views, including on immigration, as well as his influence on trade policy and other parts of the White House’s economic agenda.

“With anything that could change this White House, it could result in an upside surprise,” said Jason Celente, senior portfolio manager at Insight Investment in New York.

The 10-year Treasury yield was 2.197 percent, unchanged from on Thursday and marginally higher on the week.

News outlets, citing various sources, reported White House Chief of Staff John Kelly would soon decide on Bannon’s job.

Shortly after those reports, White House spokeswoman Sarah Sanders said in a statement that Kelly and Bannon had agreed that Friday would be Bannon’s last day in the job.

All of Wall Street’s three major indexes erased earlier losses on reports of Bannon’s departure.

The S&P 500 and Nasdaq were modestly higher in late trading, while the Dow Jones Industrial Average was little changed.

Earlier on Friday, benchmark yields hit near a seven-week low on worries about U.S. President Trump’s ability to enact tax cuts, major infrastructure spending and other parts of his economic agenda.

Those concerns emerged following his comments on last weekend’s clash between white nationalists and counter-protesters in Charlottesville, Virginia.

Trump has blamed that violence on not just the white nationalists but also counter-protesters, and said there were “very fine people” in both groups. His remarks drew widespread rebukes from lawmakers, business leaders and U.S. allies.

They also spurred speculation on possible resignations from Trump’s cabinet, especially Gary Cohn, who is the director of the National Economic Council. Rumors on social media that Cohn might quit unleashed a selloff on Thursday in Wall Street stocks and spurred safe-haven demand for Treasuries.

Investor anxiety was also elevated following a knife attack that injured several people in the Finnish city of Turku. It came a day after a van killed 13 and wounded scores of others in Barcelona. Islamic State has claimed responsibility for the attack in Spain.

On the data front, U.S. consumer sentiment improved to its strongest in seven months in early August, reflecting confidence in the outlook for the economy and in personal finances as the U.S. stock market holds near record highs, the University of Michigan said on Friday.

“All the internals in the economy are still pretty positive even without tax cuts and infrastructure spending,” Celente said.