Treasuries Give Back Ground After Yesterday's Strength

(RTTNews) - After moving notably higher over the course of the previous session, treasuries gave back some ground during trading on Friday.

Bond prices moved to the downside in early trading and remained stuck in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.9 basis points to 1.720 percent.

The pullback by treasuries was partly due to profit taking following the strength seen on Thursday, which pushed the ten-year yield down to its lowest closing level in almost two months.

A sharp increase by the price of crude oil also weighed on treasuries, with crude for May delivery soaring $2.46 to $39.72 a barrel after sliding $0.49 to $37.26 a barrel in the previous session.

The rebound by the price of crude oil came as Russian Energy Minister Alexander Novak said he hopes oil producing nations will agree to an output freeze at a meeting later this month.

Traders were also digesting recent remarks from Federal Reserve officials, including Fed Chair Janet Yellen's comments during a panel discussion with former chairs Ben Bernanke, Alan Greenspan and Paul Volcker on Thursday.

Yellen described the "tremendous progress" that the U.S. economy has made since the financial crisis and shrugged off concerns about an economic bubble.

The current Fed Chief noted that the central bank would still watch the economy very carefully as it makes future decisions about interest rates.

In separate remarks this morning, New York Fed President William Dudley said he believes a cautious and gradual approach to policy normalization is appropriate.

Dudley said downside risks have diminished since earlier this year but noted there continues to be significant uncertainty about how economic growth prospects abroad will affect the U.S. economic outlook.

Economic data may drive trading next week, with traders likely to keep a close eye on reports on retail sales, industrial production, and producer and consumer price inflation.

Bond trading could also be impacted by reaction to the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury is due to sell $24 billion worth of three-year notes next Tuesday, $20 billion worth of ten-year notes next Wednesday and $12 billion worth of thirty-year bonds next Thursday.