Treasuries Close Firmly Positive Amid Renewed Geopolitical Concerns

(RTTNews) - Adding to the modest gains posted in the two previous sessions, treasuries moved notably higher during trading on Friday.

After seeing early strength, bond prices accelerated to the upside in mid-morning trading before giving back some ground in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.5 basis points to 2.345 percent.

While the ten-year yield rebounded after hitting an intraday low of 2.305 percent, it still set another new one-year closing low.

The strength among treasuries was partly due to renewed geopolitical concerns amid reports that Ukrainian forces attacked and partially destroyed a column of Russian armored personnel carriers that had crossed the border.

Andriy Lysenko, a spokesman for the Ukrainian military, told reporters that Ukrainian troops engaged the vehicles after they were spotted crossing a rebel-held section of the border under cover of darkness.

However, the Russian government denied the claims that its forces have crossed the border and has accused the Ukrainian government of trying to block efforts to provide humanitarian aid.

Treasuries also benefited from easing interest rate concerns following the release of tame inflation data from the Labor Department.

The Labor Department said its producer price index for final demand inched up by 0.1 percent in July after climbing by 0.4 percent in June. The modest increase by the index matched economist estimates.

Excluding food and energy prices, core producer prices rose by 0.2 percent in July, matching economist estimates as well as the increase seen in the previous month.

A separate report from the Federal Reserve showed a slightly bigger than expected increase in industrial production in July, while a report from Thomson Reuters and the University of Michigan showed an unexpected deterioration in consumer sentiment in August.

While developments overseas are likely to remain in focus next week, trading could also be impacted by the release of reports on consumer price inflation, housing starts, and existing home sales.

Traders are also likely to keep an eye on the minute of the latest Fed meeting, looking for indications regarding the outlook for monetary policy.