Treasuries Move Modestly Higher Following Recent Weakness

(RTTNews) - Treasuries moved modestly higher during trading on Friday, regaining some ground after trending lower over the past several sessions.

Bond prices fluctuated early in the session but moved to the upside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.3 basis points to 4.073 percent.

The ten-year yield closed lower for the first time in eight sessions, pulling back off its highest closing level in over two months.

The rebound by treasuries came after the Labor Department released a report showing producer prices in the U.S. were unexpectedly unchanged in September.

The Labor Department said its producer price index for final demand came in flat in September after rising by 0.2 percent in August. Economists had expected producer prices to inch up by 0.1 percent.

The report also said the annual rate of growth by producer prices slowed to 1.8 percent in September from an upwardly revised 1.9 percent in August.

Economists had expected the annual rate of producer price growth to dip to 1.6 percent from the 1.7 percent originally reported for the previous month.

The data reinforced optimism the Federal Reserve will continue to lower interest rates in the coming months, although hopes for another 50 basis point cut next month have largely evaporated.

"After an upside surprise from the September CPI report, producer prices came in below expectations and provide support for a 25bps rate cut in November," said Matthew Martin, Senior U.S. Economist at Oxford Economics.

Next week's U.S. economic calendar starts off relatively quiet but picks up later in the week the release of reports on retail sales and industrial production.