After moving modestly lower in early trading Friday, treasuries showed a notable turnaround over the course of the trading day. Bond prices climbed well off their early lows to end the day firmly in positive territory. Subsequently, the yield on the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.8 basis points to 1.85 percent. With the drop on the day, the ten-year yield extended a recent downward trend, ending the session at its lowest closing level in well over two months. The rebound by treasuries was partly due to a sell-off on Wall Street, with the Dow tumbling by more than 300 points at its worst levels. Concerns about developments overseas contributed to the pullback by stocks, leading some traders to move their money into the relatively safe haven of bonds. The early weakness among treasuries came following the release of the Labor Department's report on consumer price inflation in the month of March. The Labor Department said its consumer price index edged up by 0.2 percent in March, matching the increase seen in February. Economists had expected the index to rise by 0.3 percent. Core consumer prices, which exclude food and energy prices, rose by 0.2 percent for the third consecutive month. The uptick in core prices matched economist estimates. While the headline index was down by 0.1 percent compared to a year-ago, the annual rate of core price growth ticked up to 1.8 percent in March from 1.7 percent in February. The core price growth is more closely watched by the Federal Reserve. Rob Carnell, chief international economist at ING, said, "Given recent activity data weakness, which has seemed to all but rule out a June rate hike, this data adds an additional, but unhelpfully contradictory inflation element to the rate hike timing debate." "That said, it will need corroboration by activity data soon if it is not to be too late for a June hike, and that point of no return may have already been passed," he added. Following the slew of economic data released over the past week, the economic calendar for next week is relatively quiet. Nonetheless, traders are likely to keep an eye on reports on weekly jobless claims, durable goods orders, and new and existing home sales.
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