Treasuries Close Slightly Lower After Seeing Early Volatility

(RTTNews) - After seeing some volatility in early trading on Friday, treasuries moved roughly sideways for much of the session before closing slightly lower.

Bond prices remained stuck in a narrow range just below the unchanged line throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.709 percent.

The lackluster performance on the day came as traders continued to digest Janet Yellen's dovish comments at her confirmation hearing before the Senate Banking Committee on Thursday.

Yellen, the nominee to succeed Federal Reserve Chairman Ben Bernanke, defended the central bank's ultra-easy monetary policy and argued that unemployment remains too high for the Fed to consider significantly scaling back its asset purchase program.

"I believe that supporting the recovery today is the surest path to returning to a more normal approach to monetary policy," Yellen said.

Meanwhile, traders shrugged off a batch of largely disappointing economic data, including a report from the Federal Reserve showing an unexpected drop in industrial production.

The report said industrial production edged down by 0.1 percent in October after climbing by 0.7 percent in September. Economists had been expecting production to inch up by 0.1 percent.

Commenting on the report, Rob Carnell, chief international economist at ING, said the headline appears worse than the underlying picture.

"Most of the softness was concentrated in utilities and mining, in particular natural gas extraction, where on-going price softness seems to have weighed on extraction activity and production has been feeble for some months," Carnell said.

A separate report from the New York Fed showed an unexpected contraction in regional manufacturing activity in November, while the Labor Department released a report showing a bigger than expected drop in import prices in October.

Next week's trading could be impacted by the release of some more closely watched economic data, including reports on retail sales, existing home sales, and producer and consumer prices.

The minutes of the latest Federal Reserve meeting are also likely to attract some attention along with a speech by Fed Chairman Bernanke.