Treasuries Give Back Ground Following Recent Recovery

(RTTNews) - After moving sharply higher over the three previous sessions, treasuries gave back ground during the trading day on Friday.

Bond prices rebounded after initial move to the downside but pulled back firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.3 basis points to 4.010 percent.

Profit taking may have contributed to the pullback by treasuries, with the increase by the ten-year yield coming after it plunged by 29.7 basis points over the three previous sessions.

Treasuries remained well off their recent lows, however, as traders remained optimistic the Federal Reserve will slow the pace of interest rate hikes in the coming months.

Adding to the optimism, the Commerce Department released a report showing core consumer price growth accelerated by slightly less than expected in September.

The Commerce Department said the annual rate of core consumer price growth accelerated to 5.1 percent in September from 4.9 percent in August.

Economists had expected the annual rate of growth in core consumer prices, which exclude food and energy prices, to accelerate to 5.2 percent.

In other economic news, the National Association of Realtors released a report showing pending home sales in the U.S. plunged by much more than expected in the month of September.

NAR said its pending home sales index tumbled by 10.2 percent to 79.5 in September after falling by 1.9 percent to a revised 88.5 in August.

Economists had expected pending home sales to slump by 5.0 percent compared to the 2.0 percent drop originally reported for the previous month.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

The Fed's monetary policy decision is likely to be in the spotlight next week, overshadowing reports on manufacturing and service sector activity, labor productivity and factory orders.

Traders are likely to keep a close eye on the Fed's statement, looking for signs the central bank is considering slowing the pace of interest rate hikes.

Following the Fed announcement next Wednesday, the focus is likely to shift to the Labor Department's monthly jobs report due next Friday.