Treasuries Close Modestly Lower After Seeing Early Strength

(RTTNews) - After failing to sustain an early upward move, treasuries turned lower over the course of the trading session on Friday.

Bond prices slid into negative territory in morning trading and moved roughly sideways thereafter. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.186 percent.

With the modest increase, the ten-year yield climbed a little further off the nearly four-month closing low set on Monday.

The pullback by treasuries was partly due to comments by Federal Reserve Vice Chairman Stanley Fischer about the outlook for interest rates.

In an interview with CNBC, Fischer said it was too early to tell if the Fed will raise rates in September but noted that the central bank is heading in the direction of raising rates.

"We've got a little over two weeks before we make the decision," Fischer said. "And we've got time to wait and see the incoming data, and see what is going on now in the economy."

Fischer's remarks may lead to continued volatility in the coming weeks as traders focus on the incoming economic data, particularly next Friday's monthly jobs report.

The Commerce Department released a report this morning showing that personal income increased in line with economist estimates in the month of July.

The report said personal income rose by 0.4 percent, matching the increases seen in the three previous months as well as the consensus estimate.

Personal spending increased by 0.3 percent for the second consecutive month, although economists had expected spending to climb by 0.4 percent.

A separate report from the University of Michigan showed an unexpected downward revision to its consumer sentiment index for August.

Amid the uncertainty about the outlook for interest rates, the monthly jobs report is likely to be in focus next week allowing with a slew of other U.S. economic data.

Ahead of the jobs report on Friday, trading could be impacted by reports on manufacturing and service sector activity, construction spending, and international trade as well as the Fed's Beige Book.