Treasuries turned higher over the course of the trading day on Friday after moving moderately lower early in the session.
After moving to the downside in early trading, bond prices regained some ground in morning trading and climbed into positive territory in the early afternoon.
Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by 1.9 basis points at 1.875 percent after reaching a high of 1.93 percent.
The turnaround by treasuries came as some traders looked to pick up bonds at reduced levels following the early weakness.
Buying interest may also have been generated by the release of a report from the Commerce Department showing that the U.S. trade deficit unexpectedly widened in November.
With a jump in imports more than offsetting an increase in exports, the trade deficit widened to $48.7 billion in November from a revised $42.1 billion in October. Economists had expected the deficit to narrow to $41.1 billion.
Commenting on the data, IHS Global Insight U.S. Economist Gregory Daco said, “Overall, IHS Global Insight expects foreign trade to weigh down on growth in the fourth quarter bringing real GDP growth clearly below the 1.0% mark.”
Mixed news from overseas may have also impacted trading after upbeat news from overseas helped to push treasuries lower in the previous session.
While Japan announced a new $116 billion stimulus package, a report from China showing an acceleration in the pace of inflation suggested that the Chinese may not provide further stimulus.
Economic data is likely to attract attention next week following the relatively light economic calendar over the past week. Traders are likely to keep an eye on reports on retail sales, industrial production, housing starts, and consumer and producer price inflation.
Trading could also be impacted by remarks by Federal Reserve Chairman Ben Bernanke, who is due to speak at the University of Michigan next Monday.
by RTT Staff Writer
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