Treasuries Show Strong Move Back To The Upside

(RTTNews) - Treasuries moved notably higher during trading on Friday, largely offsetting the weakness seen in the two previous sessions.

Bond prices moved to the upside in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 7.9 basis points to 1.817 percent.

The rebound by treasuries came as traders continued to react to the European Central Bank's highly anticipated decision to implement quantitative easing.

In remarks at a press conference on Thursday, ECB President Mario Draghi confirmed the expansion of the bank's asset purchase program.

Draghi said the ECB will purchase 60 billion euros per month worth of securities, including investment grade sovereign bonds, beginning in March.

The expanded asset purchase program is currently scheduled to last until September of 2016, although Draghi said purchases would continue until there is a sustained improvement in inflation.

While treasuries moved lower on the news on Thursday, today's rebound was partly attributed to the belief that the ECB's bond purchases will further reduce the supply of high-quality assets.

Treasuries also benefited from their appeal as a safe haven amid anxiety over the Greek parliamentary elections scheduled for the weekend.

Polls have suggested that the anti-austerity Syriza party could emerge victorious in the elections, potentially leading Greece to abandon its budget constraints.

While the outcome of the Greek elections may be in focus early next week, the focus will quickly shift to the Federal Reserve's monetary policy announcement next Wednesday.

The Fed is widely expected to leave interest rates unchanged, although traders are likely to pay close attention to any changes to the accompanying statement.

Traders are also likely to keep an eye on reports on durable goods orders, new home sales, consumer confidence and fourth quarter GDP.