After moving lower over the two previous sessions, treasuries saw some further downside during trading on Friday.
Bond prices came under pressure early in the trading day and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.6 basis points to 2.637 percent.
With the continued increase on the day, the ten-year yield once again climbed to its highest closing level in well over three years.
Treasuries are generally seen as a safe haven, but traders seemed to shrug off concerns about a government shutdown amid expectations of further increases in interest rates.
House Republicans voted Thursday evening in favor of a short-term spending bill to fund the government until February 16th.
The spending bill includes a six-year extension of the popular Children’s Health Insurance Program and also delays some Obamacare taxes.
However, the issue of protections for illegal immigrants brought to the country as children could doom the short-term spending bill in the Senate.
Democrats have demanded that any spending bill include a deal to provide protections for the illegal immigrants known as Dreamers.
After meeting with President Donald Trump on Friday, Senate Minority Leader Chuck Schumer, D-N.Y., said they made “some progress” but noted they “still have a good number of disagreements.”
Traders also seemed unfazed by a report from the University of Michigan showing an unexpected deterioration in consumer sentiment in the month of January.
The report said the consumer sentiment index dipped to 94.4 in January from the final December reading of 95.9. Economists had expected the index to rise to 97.0.
Next week’s trading may be impacted by whether lawmakers can reach a last-minute agreement to avoid a government shutdown.
Traders are also likely to keep an eye on U.S. economic reports on new and existing home sales and durable goods orders.
The Treasury Department’s auctions of two-year, five-year, and seven-year notes may also attract attention among bond traders.
The Treasury said it plans to sell $26 billion worth of two-year notes next Tuesday, $34 billion worth of five-year notes next Wednesday and $28 billion worth of seven-year notes next Thursday.
The material has been provided by InstaForex Company – www.instaforex.com
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