Treasuries Pull Back Off Best Levels But Close Slightly Higher

(RTTNews) - Treasuries moved modestly higher over the course of morning trading on Friday but gave back some ground in the afternoon.

Bond prices pulled back off their best levels of the day but managed to close slightly higher. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1 basis point to 1.747 percent after hitting a low of 1.729 percent.

Treasuries benefited from their appeal as a safe haven aid concerns about the global economic outlook following disappointing Chinese data.

Data from the National Bureau of Statistics showed China's economy grew at the slowest rate in nearly three decades in the third quarter, raising pressure on policymakers to roll out more stimulus.

China's GDP grew 6 percent year-on-year in the third quarter after rising 6.2 percent in the second quarter. This was the slowest growth since the early 1990s. Growth was forecast to slow marginally to 6.1 percent.

In U.S. economic news, the Conference Board released a report showing an unexpected drop by its reading on leading U.S. economic indicators in the month of September.

The Conference Board said its leading economic index edged down by 0.1 percent in September after dipping by a revised 0.2 percent in August.

Economists had expected the index to rise by 0.2 percent compared to the unchanged reading originally reported for the previous month.

Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board, said the drop by the index reflected weaknesses in the manufacturing sector and the interest rate spread, which were only partially offset by rising stock prices and a positive contribution from the Leading Credit Index.

"The LEI reflects uncertainty in the outlook and falling business expectations, brought on by the downturn in the industrial sector and trade disputes," said Ozyildirim.

He added, "Looking ahead, the LEI is consistent with an economy that is still growing, albeit more slowly, through the end of the year and into 2020."

However, traders seemed reluctant to make more significant moves amid lingering uncertainty about a possible U.S.-China trade deal and questions about the Brexit deal getting through parliament.

Next week's economic calendar is relatively light, although traders are likely to keep an eye on report on new and existing home sales and durable goods orders.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.