Treasuries Move Back To The Upside Amid Geopolitical Concerns

(RTTNews) - After ending the previous session firmly in the red, treasuries showed a strong move back to the upside during trading on Friday.

Bond prices moved notably higher in early trading and continued to perform well throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4 basis points to 2.469 percent.

With the drop, the ten-year yield nearly offset yesterday's 4.5 basis point gain but remained just above Wednesday's nearly two-month closing low.

Treasuries benefited from their appeal as a safe haven amid lingering concerns about the ongoing conflicts in Ukraine and Gaza.

News of Ukrainian Prime Minister Arseniy Yatsenyuk's resignation added to worries about the situation in Ukraine, while the Palestinian death toll in Gaza has reportedly topped 800.

Significant weakness on Wall Street also suggested that trader were moving their money into less risky assets ahead of several potentially market moving events next week.

The Federal Reserve is scheduled to announce it latest monetary policy decision next Wednesday, while the Labor Department is due to release its closely watched monthly jobs report next Friday.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing a bigger than expected rebound in durable goods orders in the month of June.

The Commerce Department said durable goods orders increased by 0.7 percent in June following a 1.0 percent decrease in May. Economists had been expecting orders to climb by about 0.5 percent.

Excluding orders for transportation equipment, durable goods orders rose by a slightly stronger 0.8 percent in June compared to a 0.1 percent drop in the previous month.

The report also said orders for non-defense capital goods excluding aircraft, an indicator of business spending, surged up by 1.4 percent in June after slumping by 1.2 percent in May.

Meanwhile, shipments of non-defense capital goods excluding aircraft, which get plugged into GDP, fell by 1.0 percent in June after edging down by a revised 0.1 percent in the previous month.

Paul Dales, Senior U.S. Economist at Capital Economics, said, "This suggests that after falling by 2.8% in the first quarter, business investment in equipment may have rebounded by 8% in the second."

"Previously an increase of closer to 15% looked likely," he added. "We now expect that annualized GDP growth in the second quarter was 3.2%."

As mentioned above, next week's trading could be impacted by a number of scheduled events as well as any unforeseen developments overseas.

Along with the Fed announcement and jobs report, traders are also likely to keep an eye on reports on second quarter GDP, manufacturing activity, consumer confidence, and personal income and spending.

Bond trading could also be impacted by the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.