Following the significant rebound seen in the previous session, treasuries turned in a relatively lackluster performance during trading on Friday.
Bond prices fluctuated over the course of the session before ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.845 percent.
The choppy trading came as traders reacted to the Commerce Department’s readings on consumer price inflation, which are said to be preferred by the Federal Reserve.
The Commerce Department said consumer prices rose by 0.4 percent in September, matching the increase in August. Economists had expected prices to rise by 0.3 percent.
Excluding food and energy prices, core consumer prices increased by 0.3 percent in September after inching up by 0.1 percent in the previous month. The core price growth matched economist estimates.
The annual rate of consumer price growth was unchanged at 3.4 percent, while the annual rate of core consumer price growth slipped to 3.7 percent in September from 3.8 percent in August. Both year-over-year readings matched expectations.
“Although consumer prices rose faster than expected from a month ago, core inflation continues to lose speed and this report will not likely change the Fed’s view that inflation will slow in the coming months as demand slows,” said Jeffrey Roach, Chief Economist for LPL Financial.
He added, “Eventually, spending will moderate after several months of consumers spending more than they earn.”
Traders may also have been reluctant to make significant moves ahead of the Fed’s monetary policy meeting next week.
With the Fed widely expected to leave interest rates unchanged, traders are likely to pay close attention to the accompanying statement for clues about the possibility of future rate hikes.
The Fed’s monetary policy decision is likely to be in the spotlight next week, although the monthly jobs report may also attract attention along with reports on manufacturing and service sector activity.