Treasuries Give Back Ground Amid Rate Hike Concerns

(RTTNews) - After moving modestly higher over the course of the two previous sessions, treasuries moved back to the downside during trading on Friday.

Bonds prices climbed off their worst levels going into the close but remained in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 1.578 percent.

The pullback by treasuries was partly due to comments from some Federal Reserve officials that raised concerns about a near-term interest rate hike.

In a speech in Anchorage, Alaska, on Thursday, San Francisco Fed President John Williams warned of the economic risks of waiting too long to resume raising interest rates.

"In the context of a strong domestic economy with good momentum, it makes sense to get back to a pace of gradual rate increases, preferably sooner rather than later," Williams said.

"The decisions we make today must take aim at where we're going, not where we are," he added. "I liken it to a car: When you're nearing the intersection, you ease off the gas so you can be ready to stop. You don't wait until you get right in front of the red light; that would force you to slam on the brakes."

Earlier this week, New York Fed President William Dudley said it is possible the central bank could raise interest rates as soon as next month.

The minutes of the Fed's last meeting in July suggested that officials were mixed about the outlook for monetary policy.

The Fed said officials generally agreed that it was prudent to accumulate more economic data before removing monetary accommodation.

However, the central bank said "some" members anticipated that economic conditions would soon warrant taking another step in removing policy accommodation.

Following today's lack of major U.S. economic data, next week's trading may be impacted by reaction to reports on durable goods orders and new and existing home sales.

Fed Chair Janet Yellen is also due to speak at the central bank's annual conference in Jackson Hole, Wyoming, next Friday.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.

The Treasury said it plans to sell $26 billion worth of two-year notes next Tuesday, $34 billion worth of five-year notes next Wednesday and $28 billion worth of seven-year notes next Thursday.