Treasuries Close Modestly Lower But Off Worst Levels

(RTTNews) - After seeing notable weakness in early trading on Friday, treasuries regained some ground before closing modestly lower.

Bond prices climbed off their worst levels of the day but still closed in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.4 basis points to 2.409 percent.

The modest weakness among treasuries came amid continued strength on Wall Street, with the major averages once again reaching new record highs.

Stocks continued to benefit from renewed optimism about corporate tax reform under President Donald Trump.

At a meeting with airline executives on Thursday, Trump pledged to unveil a tax plan that includes a "big league" reduction in the tax burden on American business in the next few weeks.

"That's coming along very well. We're way ahead of schedule, I believe," Trump said. "We're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax."

Trump has previously proposed reducing the corporate income tax rate to 15 or 20 percent from the current rate of 35 percent.

News that Trump spoke by phone with Chinese President Xi Jinping and agreed to honor the "one China" policy also eased concerns about tensions between the two economic superpowers.

On the U.S. economic front, the Labor Department released a report showing that import prices rose by more than expected in January amid another jump in fuel prices.

The report said import prices increased by 0.4 percent in January after climbing by an upwardly revised 0.5 percent in December. Economists had expected import prices to rise by 0.2 percent.

The Labor Department also said export prices inched up by 0.1 percent in January after rising by 0.4 percent in December. The uptick in export prices matched economist estimates.

Meanwhile, a separate report from the University of Michigan showed a bigger than expected pullback in consumer sentiment in February.

The preliminary report showed that the consumer sentiment index dropped to 95.7 in February from the final January reading of 98.5. Economists had expected the index to edge down to 97.9.

The bigger than expected decrease by the index came after it reached its highest level since January of 2004 in the previous month.

Despite the decline, the survey's chief economist Richard Curtin said, "To be sure, confidence remains quite favorable, with only five higher readings in the past decade."

The U.S. economic calendar for next week starts off relatively quiet but picks up considerably as the week progresses.

A report on producer price inflation is due on Tuesday, while a slew of data is scheduled to be released on Wednesday, including reports on consumer prices, retail sales and industrial production.

Reports on regional manufacturing activity, housing starts, and homebuilder confidence are also scheduled to be released next week.

Federal Reserve Chair Janet Yellen's semi-annual testimony before Congress is also likely to attract attention along with speeches by a number of other Fed officials.