Treasuries Close Higher After Initial Move To The Downside

(RTTNews) - After initially moving lower, treasuries showed a notable turnaround over the course of the trading session on Friday.

Bond prices hovered in positive territory going into the final hour of trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 2.169 percent.

With the decrease on the day, the ten-year yield more than offset the 2.3 basis point increase seen on Thursday, hitting its lowest closing level in two months.

The rebound by treasuries came as traders digested Federal Reserve Chair Janet Yellen's remarks at the Fed's economic policy symposium in Jackson Hole, Wyoming.

Yellen refrained from discussing monetary policy in her prepared remarks, focusing on the topic of financial stability a decade after the onset of the financial crisis.

"The events of the crisis demanded action, needed reforms were implemented, and these reforms have made the system safer," Yellen said.

Yellen said core reforms enacted after the 2008 financial crisis have boosted financial resilience without limiting credit or growth.

"Yellen had nothing to say today about the outlook for monetary policy," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "With economic growth and the labor market looking good, we still think that the Fed will hike interest rates again in December."

He added, "But that forecast assumes Congress manages to raise the debt ceiling without too much disruption and is making progress on a modest package of tax cuts."

On the U.S. economic front, the Commerce Department released a report showing a sharp pullback in durable goods orders in the month of July.

The Commerce Department said durable goods orders plunged by 6.8 percent in July after surging up by 6.4 percent in June. Economists had expected durable goods orders to slump by 6.0 percent.

Excluding a steep drop in orders for transportation equipment, durable goods orders increased by 0.5 percent in July after inching up by 0.1 in June. Ex-transportation orders had been expected to rise by 0.4 percent.

Economic data is likely to attract attention next week, with the closely watched monthly jobs report due to be released next Friday.

Reports on consumer confidence, personal income and spending, pending home sales, and manufacturing activity may also attract attention.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.

The Treasury is due to sell $26 billion worth of two-year notes and $34 billion worth of five-year notes next Monday and $28 billion worth of seven-year notes next Tuesday.