Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - After coming under pressure in early trading on Friday, treasuries regained some ground over the course of the session but still closed in the red.

Bond prices climbed well off their early lows but were unable to break into positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.6 basis points to 2.658 percent after reaching a high of 2.698 percent.

Profit taking contributed to the initial weakness among treasuries, as some traders cashed in on the upward trend seen over the past few sessions.

Traders were also presented with a slew of U.S. economic data, including a report showing an unexpected acceleration in the pace of Chicago-area business activity.

The report from MNI Indicators said the Chicago Business Barometer ticked up to 59.8 in February from 59.6 in January, with a reading above 50 indicating growth in Chicago-area business activity. Economists had expected the barometer to drop to 56.4.

Thomson Reuters and the University of Michigan also released a report showing a modest upward revision to their reading on consumer sentiment in February, while the National Association of Realtors reported a slight uptick in pending home sales in January.

Meanwhile, traders largely shrugged off a report from the Commerce Department showing a notable downward revision to pace of fourth quarter GDP growth.

The report said GDP rose by 2.4 percent in the fourth quarter compared to the previously reported 3.2 percent growth, but the data was viewed as old news.

Peter Boockvar, managing director at the Lindsey Group, said, "We're already 2/3 of the way thru Q1, which we know was influenced by the weather and is expected to slow to about 2% growth but to be followed by expected growth of around 3% in the 3 quarters thereafter in 2014."

Economic data is likely to remain in focus next week, with the spotlight on the monthly employment report due to be released on Friday.

Ahead of the jobs report, trading could be impacted by the release of reports on manufacturing and service sector activity, personal income and spending, and private sector employment.

The Federal Reserve is also due to release its Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Fed districts.