Treasuries Close Modestly Lower Following Lackluster Session

(RTTNews) - Treasuries moved slightly lower during trading on Friday, partly offsetting the modest strength seen in the previous session.

After initially showing a lack of direction, bond prices dipped somewhat more firmly into the red as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1 basis point to 2.746 percent.

The modest pullback by treasuries came as traders once again shrugged off a disappointing economic report amid indications that the data was distorted by the severe winter weather.

Early in the day, the Federal Reserve released a report showing an unexpected drop in industrial production, although the central bank noted that the weather curtailed manufacturing production in some regions of the country.

The report said industrial production fell by 0.3 percent in January after rising by 0.3 percent in December. The pullback came as a surprise to economists, who had expected production to increase by another 0.3 percent.

"Industrial production usually bounces back after a period of bad weather, as postponed orders are completed," said Paul Dales, Senior U.S. Economist at Capital Economics. "With the weather having been just as severe in February, however, this may not happen until March."

"But it will happen eventually," he added. "After all, the fundamentals have not changed. The outlooks for the domestic and global economies are still better than for some time."

A separate report from Thomson Reuters and the University of Michigan showed that consumer sentiment held steady in February compared to expectations for a drop.

Following the holiday on Monday, housing data is likely to be in focus next week, including reports on housing starts, existing home sales, and homebuilder confidence.

Reports on inflation and regional manufacturing activity may also attract some attention along with the minutes of the latest Fed meeting.