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Treasuries Pull Back Off Best Levels But Close Firmly Positive

After ending the previous session roughly flat, treasuries showed a significant move to the upside during trading on Friday.

Bond prices pulled back off their best levels in afternoon trading but remained firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped by 8.2 basis points to 2.455 percent.

With the notable decrease on the day, the ten-year yield ended the session at its lowest closing level in well over a year.

The strong upward move by treasuries came amid a sell-off on Wall Street, with traders cashing in on recent gains by stocks after yesterday’s strong upward move.

Lingering uncertainty about trade talks between the U.S. and China is also weighing on stocks ahead of another round of high-level negotiations next week.

Traders also continued to digest the Federal Reserve’s dovish monetary policy announcement earlier in the week.

The Fed’s decision to move away from plans to continue raising interest rates this year has been described by some analysts as an effort to keep the stock markets afloat amid an expected contraction in first quarter earnings.

The central bank has also been accused of bending to pressure from President Donald Trump, who has claimed U.S. economic growth would be even stronger if the Fed had not raised rates last year.

Chairman Jerome Powell has continually touted the Fed’s independence, however, suggesting the dovish tone could also reflect legitimate concerns about the economic outlook.

Adding to the concerns about the outlook for the economy, the yield on the benchmark ten-year note fell below the yield on the three-month bond, which is seen by many as a reliable harbinger of a recession.

Meanwhile, traders largely shrugged off a report from the National Association of Realtors showing a substantial rebound in existing home sales in the month of February.

NAR said existing home sales soared by 11.8 percent to an annual rate of 5.51 million in February after slumping by 1.4 percent to a revised rate of 4.93 million in January.

Economists had expected existing home sales to surge up by 3.2 percent to a rate of 5.10 million from the 4.94 million originally reported for the previous month.

Next week’s trading may be impacted by reaction to the latest batch of U.S. economic data, including reports on housing starts, consumer confidence, pending home sales, personal income and spending and new home sales.

Bond traders are also likely to keep an eye on the results of the Treasury Department’s auctions of two-year, five-year, and seven-year notes.

The material has been provided by InstaForex Company – www.instaforex.com