Treasuries Come Under Pressure After Chinese Rate Cut

(RTTNews) - After ending the previous session roughly flat, treasuries showed a notable move to the downside during trading on Friday.

Bond prices came under pressure in early trading and remained firmly negative throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.8 basis points to 2.083 percent.

The weakness among treasuries was primarily in reaction to news China's central bank unexpectedly lowered interest rates.

The People's Bank of China cut both the one-year lending rate and the deposit rate by a quarter-point, marking the sixth rate cut since last November.

In a statement, the central bank noted a need to continue the flexible use of monetary policy tools to create an environment for stable and healthy economic development.

Following yesterday's comments from European Central Bank President Mario Draghi, the news added to optimism the global central banks will provide further stimulus.

Continued strength on Wall Street also weighed on treasuries, as stocks extended the rally seen over the course of the previous session.

The major averages have risen to their best levels in at least two months, with the tech-heavy Nasdaq posting a particularly strong gain.

The Federal Reserve is likely to move back into the spotlight next week, as the central bank is due to announce its latest monetary policy decision on Wednesday.

While the Fed is widely expected to leave interest rates unchanged, traders will be keeping a close eye on the accompanying statement.

Economic data may also attract some attention, with reports on new home sales, durable goods orders, third quarter GDP, and personal income and spending among those due to be released next week.