Treasuries Close Roughly Flat After Recovering From Early Weakness

(RTTNews) - After coming under pressure early in the session, treasuries recovered over the course of the trading day on Friday.

Bond prices climbed well off their worst levels of the day to end the session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.199 percent after reaching a high of 2.229 percent.

The roughly flat close by treasuries came as traders looked ahead to next week's monetary policy announcement by the Federal Reserve.

CME Group's FedWatch Tool indicates a 99.6 percent chance that the Fed will raise interest rates by a quarter point next week.

With the Fed widely expected to raise rates, traders will pay close attention to the accompanying statement for clues about future rate hikes.

Traders were also digesting the unexpected outcome of the U.K. elections in which no party gained a clear majority, resulting in a hung parliament.

The election backfired on U.K. Prime Minister Theresa May and her Conservative party, who had expected to expand their majority.

In remarks this morning, May indicated she would work with Northern Ireland's Democratic Unionist Party to form a government and provide certainty for the British people.

"Our two parties have enjoyed a strong relationship over the many years," May said. "This gives me the confidence to believe that we will be able to work together in the interests of the whole United Kingdom."

The Fed's monetary policy decision is likely to be in the spotlight next week, with the central bank widely expected to announce a quarter-point rate hike on Wednesday.

Traders will also be presented will some key economic data, including reports on retail sales, industrial production, housing starts, and producer and consumer price inflation.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to sell $24 billion worth of three-year notes and $20 billion worth of ten-year notes next Monday and $12 billion worth of thirty-year bonds next Tuesday.