Treasuries Close Roughly Flat Following Yesterday's Rally

(RTTNews) - Following the strong upward move seen in the previous session, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices spent the day lingering near the unchanged line before closing roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 4.189 percent.

The choppy trading on the day came as traders reacted to a Labor Department report showing producer prices in the U.S. increased by slightly more than expected in the month of June following Thursday's tamer-than-expected consumer price inflation data.

The Labor Department said its producer price index for final demand rose by 0.2 percent in June following a revised unchanged reading in May.

Economists had expected producer prices to inch up by 0.1 percent compared to the 0.2 percent dip originally reported for the previous month.

The report also said the annual rate of producer price growth accelerated to 2.6 percent in June from an upwardly revised 2.4 percent in May.

The annual rate of producer price growth was expected to creep up to 2.3 percent from the 2.2 percent originally reported for the previous month.

"The inflation data this week have been mixed," said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance. "With consumer inflation lower-than-expected and producer price inflation higher-than-expected, the market should put more weight on the former because that is what the Fed is most focused on." He added, "However, this morning's data is a reminder that inflation is still [an] issue and is likely to be with us for longer than most people expect."

Next week's trading may be impacted by reaction to reports on retail sales, industrial production, import and export prices and housing starts.