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Treasuries Move Back To The Upside After Yesterday's Pullback

Following the sharp pullback seen in the previous session, treasuries showed a strong move back to the upside during trading on Friday.

Bond prices gave back some ground after an early advance but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 8.3 basis points to 4.629 percent.

The early strength among treasuries came after the Labor Department released a report this morning showing only a slight uptick in U.S. import prices.

The Labor Department said import prices crept up by 0.1 percent in September after climbing by an upwardly revised 0.6 percent in August.

Economists had expected the pace of import price growth to match the 0.5 percent increase originally reported for the previous month.

Meanwhile, the report said export prices advanced by 0.7 percent in September after jumping by a downwardly revised 1.1 percent in August.

Export prices were expected to climb by 0.6 percent compared to the 1.3 percent surge originally reported for the previous month.

However, treasuries pulled back off their highs after a report from the University of Michigan showed a surge in consumers’ near-term inflation expectations.

The report showed year-ahead inflation expectations jumped to 3.8 percent in October from 3.2 percent in September, reaching the highest level since May.

Long-run inflation expectations also rose to 3.0 percent in October from 2.8 percent in September but remained within the narrow 2.9-3.1 percent range seen for 25 of the last 27 months.

Next week’s trading may be impacted by reaction to latest U.S. economic data, including reports on retail sales, industrial production, housing starts and existing home sales.

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