Treasuries Move Modestly Lower After Seeing Early Strength

(RTTNews) - After failing to sustain an initial move to the upside, treasuries showed a lack of direction for much of the trading session on Friday before eventually closing modestly lower.

Bond prices pulled back off their early highs and spent most of the day lingering slightly below the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.7 basis points to 4.187 percent.

With the uptick on the day, the ten-year yield closed higher for the third straight sessions, reaching its highest closing level in almost two months.

Treasuries initially reacted positively to data from the Labor Department showing a modest downward revision to consumer price growth in December.

The revised data showed the consumer price index rose by 0.2 percent in December compared to the previously reported 0.3 percent increase.

Meanwhile, the increase by core consumer prices, which exclude food and energy prices, was unrevised at 0.3 percent.

Buying interest waned shortly after the release of the data, however, as the modest revision is not expected have to have a major impact on the outlook for interest rates.

Following the release of the revised numbers, CME Group's FedWatch Tool still indicates just a 17.5 percent chance the Federal Reserve will lower interest rates in March.

The subsequent pullback by treasuries may have reflected uncertainty ahead of the release of some key economic data next week, including reports on consumer and producer price inflation, retail sales and industrial production.