Treasuries Move Modestly Lower Following Recent Strength

(RTTNews) - After moving sharply higher over the past few sessions, treasuries gave back some ground during trading on Friday.

Bond prices fluctuated over the course of the trading day but eventually ended the session modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 2.518 percent.

With the modest uptick on the day, the ten-year yield climbed of the six-month closing low set in the previous session.

The modest pullback by treasuries was partly due to profit taking following the recent strength, which reflected speculation regarding further European stimulus measures next month.

Selling pressure may also have been generated by the release of a report from the Commerce Department showing a much bigger than expected jump in housing starts in the month of April.

The Commerce Department said housing starts surged up 13.2 percent to an annual rate of 1.072 million in April from the revised March estimate of 947,000. Economists had expected housing starts to climb to a rate of 980,000.

Building permits, an indicator of future housing demand, also jumped 8.0 percent to an annual rate of 1.080 million in April from the revised March rate of 1.0 million.

On the other hand, Thomson Reuters and the University of Michigan released a separate report showing an unexpected deterioration in consumer sentiment in the month of May.

The report showed that the consumer sentiment index fell to 81.8 in May from 84.1 in April, while economists expected the index to inch up to a reading of 84.5.

"The main concern behind the small May loss involved dispiriting trends in wages," survey director Richard Curtin said, according to Reuters.

The economic calendar for next week is relatively quiet following the slew of data released over the past week, although traders are still likely to keep an eye on reports on new and existing home sales and weekly jobless claims.

The minutes of the latest Federal Reserve meeting are also likely to attract attention along with remarks by several Fed officials.