Treasuries Close Sharply Higher Amid Sell-Off On Wall Street

(RTTNews) - Treasuries moved sharply higher during trading on Friday, extending the strong upward move seen over the past several sessions.

Bond prices spiked higher in early trading and saw further upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10 basis points to 2.139 percent.

With the steep drop on the day, the ten-year yield ended the trading session at its lowest closing level in well over a month.

The rally by treasuries came amid a sell-off on Wall Street, with the S&P 500 falling to its worst intraday level since mid-October.

The major averages more than offset the moderate gains posted in the previous session amid a continued decrease by the price of crude oil.

Reflecting concerns about a global supply glut, crude oil for January delivery tumbled $1.14 to a new six-year closing low of $35.62 a barrel.

Treasuries also benefited from their appeal as a safe haven ahead of the Federal Reserve's highly anticipated monetary policy meeting next week.

While the Fed is widely expected to announce an increase in interest rates, traders will be looking to the accompanying statement for clues about the outlook for further rate hikes.

On the economic front, the Commerce Department released a report this morning showing that retail sales rose by slightly less than expected in the month of November.

The report said retail sales rose by 0.2 percent in November after inching up by 0.1 percent in October. Economists had expected sales to increase by about 0.3 percent.

However, core retail sales, which exclude autos, gasoline, and building materials, increased by 0.6 percent in November after rising by 0.2 percent in October.

Steve Murphy, U.S. economist at Capital Economics, said, "All things considered, the November retail sales report reaffirms our view that real consumption will be around 2.5% annualized in the fourth quarter."

"More importantly, it dismisses any concerns of a potential slump in household spending after a couple of weaker months in August and September," he added. "Not that there is much doubt any more, but this supports the case for a rate hike by the Fed next week."

A separate report from the Labor Department showed an unexpected rebound in producer prices in November, while the University of Michigan reported a modest improvement in consumer sentiment in December.

The Fed meeting is likely to be in the spotlight next week, with the central bank due to announce its latest monetary policy decision Wednesday afternoon.

Ahead of the announcement, trading could be impacted by reports on consumer prices, housing starts, and industrial production.