Treasuries Move Modestly Lower Following Inflation Data

(RTTNews) - Following the rebound seen in the previous session, treasuries moved back to the downside during trading on Friday.

Bond prices regained some ground after an early pullback but remained in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 1.4 basis points to 4.241 percent.

The weakness among treasuries may partly have reflected renewed concerns about inflation after the Labor Department released a report showing producer prices increased by much more than expected in the month of December.

The Labor Department said its producer price index for final demand climbed by 0.5 percent in December after rising by 0.2 percent in November. Economists had expected producer prices to rise by another 0.2 percent.

The report also said producer prices in December were up by 3.0 percent compared to the same month a year ago, unchanged from November. The annual rate of growth was expected to slow to 2.7 percent.

Meanwhile, traders were also reacting to news that Trump announced his intent to nominate former Federal Reserve Governor Kevin Warsh to succeed Fed Chair Jerome Powell.

"While the markets are probably relieved that a well-known, former Fed official has been nominated as the next Fed chair, they are also likely to pivot to concerns that he won't be as dovish as they were expecting the new chair to be," said Chris Zaccarelli, Chief Investment Officer for Northlight Asset Management.

The Labor Department's monthly jobs report is likely to be in the spotlight next week, while reports on manufacturing and service sector activity, job openings and consumer sentiment may also attract attention along with the latest developments on the geopolitical front.