Treasuries See Further Downside Even As Inflation Data Meets Estimates

(RTTNews) - Following the notable pullback seen during the previous session, treasuries saw continued weakness during trading on Friday.

Bond prices fluctuated early in the session but slid firmly into negative territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 3.1 basis points to 4.139 percent.

The continued weakness among treasuries came even though the Commerce Department released closely watched consumer price inflation data that largely came in line with economist estimates.

The Commerce Department said its personal consumption expenditures (PCE) price index climbed by 0.3 percent in September, matching the growth seen in August along with economist estimates.

The annual rate of growth by the PCE price index ticked up to 2.8 percent in September from 2.7 percent in August, which was also in line with expectations.

Excluding food and energy prices, the core PCE price index rose by 0.2 percent in September, matching the increases seen in the two previous months as well as economist estimates.

The annual rate of growth by the core PCE price index edged down to 2.8 percent in September from 2.9 percent in August. Economists had expected the annual rate of growth to remain unchanged.

The unexpected slowdown in the annual rate of core price growth has reinforced recent optimism about the outlook interest rates ahead of next week's Federal Reserve meeting.

However, a report from the University of Michigan showing a bigger than expected rebound by U.S. consumer sentiment in December may have reduced treasuries' safe haven appeal.

The University of Michigan said its consumer sentiment index climbed to 53.3 in December from 51.0 in November. Economists had expected the consumer sentiment index to rise to 52.0.

The bigger than expected rebound by the consumer sentiment index came after it dropped to its lowest level since hitting a record low of 50.0 in June 2022.

Next week's trading is likely to be driven by reaction to the Fed's monetary policy decision as well as any hints about the outlook for interest rates.