Treasuries Close Roughly Flat Following Choppy Trading Day

(RTTNews) - Following the pullback seen in the previous session, treasuries showed a lack of direction over the course of the trading day on Friday.

Bond prices spent much of the day lingering near the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by less than a basis point to 3.997 percent.

The choppy trading on the day came even though the Labor Department released a highly anticipated report showing consumer prices increased by less than expected in the month of September.

While the data increased confidence the Federal Reserve will continue lowering interest rates in the coming months, the likely rate cuts may already have been priced into the bond markets following recent strength.

The Labor Department said its consumer price index rose by 0.3 percent in September after climbing by 0.4 percent in August. Economists had expected consumer prices to rise by another 0.4 percent.

The report also said the annual rate of growth by consumer prices ticked up to 3.0 percent in September from 2.9 percent in August, although that was slower than the 3.1 percent jump expected by economists.

Excluding food and energy prices, the core consumer price index crept up by 0.2 percent in September after rising by 0.3 percent in August. Core consumer prices were expected to increase by another 0.3 percent.

The Labor Department also said the annual rate of growth by core consumer prices slowed to 3.0 percent in September from 3.1 percent August. Economists had expected the pace of growth to remain unchanged.

"Consumer inflation came in cooler in September, reinforcing expectations that the Fed will cut rates again at next week's policy meeting," said Nationwide Chief Economist Kathy Bostjancic.

She added, "We remain of the view that the Fed will cut the fed fund rate by another 50bps by year-end as the weakening in the labor market outweighs concerns about moderately higher inflation stemming mostly from the tariffs."

The Fed's monetary policy announcement is likely to be in the spotlight next week, with the central bank widely expected to lower interest rates by another quarter point.