Treasuries Give Back Ground Following Recent Strength

(RTTNews) - After showing a notable move to the upside over the past few sessions, treasuries gave back some ground during trading on Friday.

Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.7 basis points to 2.068 percent.

With the increase on the day, the ten-year yield rebounded after ending the previous session at its lowest closing level since November of 2016.

The pullback by treasuries was partly due to profit taking, with traders cashing in on some of the recent strength in the bond markets.

News that President Donald Trump did not follow-through on retaliatory strikes against Iran for downing a U.S. drone also reduced the appeal of the safe haven of bonds.

Trump revealed in a post on Twitter that he was just ten minutes away from launching an attack on Iran before calling off the strikes.

"We were cocked & loaded to retaliate last night on 3 different sights when I asked, how many will die. 150 people, sir, was the answer from a General," Trump tweeted.

"10 minutes before the strike I stopped it, not proportionate to shooting down an unmanned drone," he added. "I am in no hurry, our Military is rebuilt, new, and ready to go, by far the best in the world."

The Trump administration has claimed the drone was over international waters when it was shot down, although Iran's Revolutionary Guard has argued the drone was flying over Iranian territory.

The pullback by treasuries also came after the National Association of Realtors released a report showing a bigger than expected jump in U.S. existing home sales in the month of May.

NAR said existing home sales surged up by 2.5 percent to an annual rate of 5.34 million in April, while revised data showed existing home sales in April were unchanged at a rate of 5.21 million.

Economists had expected existing home sales to increase by 1.2 percent to a rate of 5.25 million from the 5.19 million originally reported for the previous month.

Developments overseas may attract attention next week along with reports on new home sales, consumer confidence, durable goods orders, and personal income and spending.

The G20 summit in Japan is also likely to be in focus, with Trump due to meet with Chinese President Xi Jinping in an effort to revive trade talks.

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.