Treasuries Pull Back Further Off Their Recent Highs

(RTTNews) - Treasuries came under pressure during trading on Friday, extending the downward move seen in the previous session and pulling back further off their recent highs.

After falling sharply in morning trading, bond prices regained some ground but remained firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, advanced by 4.6 basis points to 2.199 percent.

With the increase on the day, the ten-year yield added to the 6.3 basis point jump seen on Thursday, climbing further off Wednesday's one-year closing low.

The continued pullback by treasuries was partly due to the release of upbeat U.S. economic data, including a report from the Commerce Department showing a bigger than expected rebound in housing starts in the month of September.

The report said housing starts climbed 6.3 percent to a seasonally adjusted annual rate of 1.017 million in September after tumbling 12.8 percent to a rate of 957,000 in August. Economists had expected housing starts to rise to a rate of 1.008 million.

Building permits, an indicator of future housing demand, also rose by 1.5 percent to a rate of 1.018 million in September from the revised August rate of 1.003 million.

Additionally, Reuters and the University of Michigan released a report showing an unexpected improvement in consumer sentiment in the month of October.

The report said the preliminary reading on the consumer sentiment index for October came in at 86.4 compared to the final September reading of 84.6. Economists had expected the index to edge down to a reading of 84.0.

With the unexpected increase, Reuters said the consumer sentiment index rose to its highest level since July of 2007.

Traders were also reacting to comments from a member of the European Central Bank's Executive Board indicating that the bank plans to begin its asset purchase program within the next few days.

Following the slew of U.S. economic data released over the past few days, the economic calendar for next week is relatively quiet.

Nonetheless, traders are likely to keep a close eye on reports on new and existing home sales, consumer prices, and weekly jobless claims.