Treasuries Close Nearly Flat After Recovering From Early Drop

(RTTNews) - After recovering from an early move to the downside, treasuries turned in a lackluster performance over the course of the trading session on Friday before ending the day roughly flat.

Bond prices spent much of the session lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.845 percent.

The choppy trading came following the release of a report from the Commerce Department showing that U.S. economic activity increased by more than expected in the third quarter.

The report said real gross domestic product climbed by 2.9 percent in the third quarter after rising by 1.4 percent in the second quarter. Economists had expected 2.5 percent growth.

The stronger than expected GDP growth in the third quarter reflects the biggest increase since a 5.0 percent jump in the third quarter of 2014.

The data generated some optimism about the economy while also increasingly the likelihood of a near-term interest rate hike by the Federal Reserve.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said, "The bigger than expected 2.9% annualized gain in third-quarter GDP growth confirms that the economic recovery has regained some of the momentum lost within the last year."

"As such, this leaves the Fed firmly on track to raise interest rates in December and a hike at next week's FOMC meeting isn't entirely out of the question," he added.

Meanwhile, a separate report from the University of Michigan showed that consumer sentiment deteriorated by more than previously estimated in the month of October.

The University of Michigan said its consumer sentiment index for October was downwardly revised to 87.2 from the preliminary reading of 87.9. The index is down from September's final reading of 91.2.

The downward revision came as a surprise to economists, who had expected the consumer sentiment index to be upwardly revised to 88.5.

Traders were also reacting to news that the FBI is re-opening its investigation into Hillary Clinton's use of a private email server while Secretary of State, potentially damaging her presidential campaign

FBI Director James Comey sent a letter to several lawmakers who chair relevant committees to inform them that the FBI has learned of the existence of new emails that appear to be pertinent to the investigation.

The Federal Reserve is likely to be in the spotlight next week, with the central bank due to announce its latest monetary policy decision next Wednesday.

While the Fed is widely expected to remain on hold ahead of the impending elections, analysts have suggested the accompanying statement could further hint at the likelihood of a rate hike in December.

The monthly jobs data is also likely to attract attention next week along with reports on personal income and spending, manufacturing and service sector activity, and international trade.