Treasuries Close Moderately Higher Following Recent Pullback

(RTTNews) - After trending lower over the past few sessions, treasuries showed a notable move back to the upside during trading on Friday.

Bond prices moved higher in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.6 basis points to 2.561 percent.

The ten-year yield gave back some ground after closing higher in the three previous sessions but remained well off its recent lows.

The rebound by treasuries came as traders looked ahead to the Federal Reserve's monetary announcement next Wednesday.

While the Fed is not widely expected to announce plans to taper its asset purchase program following next week's meeting, traders will be looking for any signals regarding the September meeting.

"Although the recent incoming data have suggested that second-quarter GDP growth could be particularly disappointing, with a sub 1.0% reading possible, we still expect the Fed to begin tapering its monthly asset purchases in September," Capital Economics said in a research note.

The firm added, "Gains in employment have remained more robust and, rightly or wrongly, Fed officials have been very vocal in blaming much of the lingering weakness in economic growth on fiscal consolidation."

Traders largely shrugged off a report from Thomson Reuters and the University of Michigan showing consumer sentiment at a six-year high in July.

The report showed that the consumer sentiment index for July was upwardly revised to 85.1 from the preliminary reading of 83.9. Economists had expected the index to be upwardly revised to 84.0.

With the upward revision, the index is above the final June reading of 84.1 and at its highest level since July of 2007.

While the outcome of the Fed meeting will be in the spotlight next week, traders are also likely to keep a close eye on the monthly jobs report as well as the initial report on second quarter GDP.