Treasuries Move Back To The Upside Amid Government Shutdown Worries

(RTTNews) - After giving back some ground in the previous session, treasuries moved back to the upside on Friday amid worries about a government shutdown.

Bond prices moved steadily higher for much of the session before pulling back off their highs going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.4 basis points to 2.619 percent.

The strength among treasuries came amid continued concerns about developments in Washington, where lawmakers continue to wrangle over a bill to keep the government running.

In the Senate, lawmakers voted 54 to 44 to approve a temporary spending bill, with the vote coming down strictly along party lines.

The Senate version of the bill extends government spending through November 15th rather than December 15th and strips language from a House-passed bill that defunded Obamacare.

With the vote in the Senate, the House Republican leadership will have to decide whether to bring the Senate bill up for a vote or risk a government shutdown.

The House is scheduled to be in session over the weekend, but House Speaker John Boehner, R-Ohio, has previously suggested that he will not accept a "clean" spending bill from the Senate.

If a new continuing resolution is not approved by both houses of Congress and signed by President Obama, government funding is currently slated to run out on Monday.

On the economic front, the Commerce Department released a report showing that U.S. personal income and spending both rose in line with estimates in August.

The report said personal income rose by 0.4 percent in August following an upwardly revised 0.2 percent increase in July. The acceleration in the pace of growth matched expectations.

Additionally, the Commerce Department said personal spending increased by 0.3 percent in August after rising by an upwardly revised 0.2 percent in the previous month. The spending growth also came in line with estimates.

A separate report from Thomson Reuters and the University of Michigan showed an upward revision to their reading on U.S. consumer sentiment in the month of September, although the index still pointed to a deterioration in sentiment compared the previous month.

Next week's trading is likely to be driven by the weekend's events in Washington and whether lawmakers are able to avert a government shutdown.

Regardless of what happens on Capitol Hill, however, traders are likely to keep a close eye on the Labor Department's monthly jobs report on Friday.

Reports on national manufacturing and service sector activity, construction spending and factory orders may also attract some attention.