Treasuries Close Roughly Flat Following Lackluster Trading Session

(RTTNews) - Treasuries turned in a relatively lackluster performance throughout much of the trading day on Friday before closing roughly flat.

Bond prices had a slightly positive bias for much of the session but finished the day near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 2.271 percent.

The choppy trading experienced by treasuries may partly have reflected trepidation ahead of the Federal Reserve's monetary policy meeting next week.

The Fed is widely expected to leave interest rates unchanged following the meeting, although traders are likely to keep a close eye on the accompanying statement.

Many analysts still expect the Fed to raise interest rates at its next meeting in September and will be closely scrutinizing the statement for any hints about the timing of the first rate hike.

With the focus on the Fed, bond traders largely shrugged off continued weakness on Wall Street as well as some disappointing housing data.

The Commerce Department released a report this morning showing new home sales unexpectedly fell to their lowest level in seven months in June.

The report said new home sales tumbled 6.8 percent to an annual rate of 482,000 in June from the downwardly revised May rate of 517,000.

The steep drop came as a surprise to economists, who had expected new home sales to edge up to 550,000 from the 546,000 originally reported for the previous month.

With the unexpected decrease, new home sales fell to their lowest annual rate since hitting 446,000 last November.

The Fed is likely to be in the spotlight next week, although traders are also likely to keep an eye on reports on second quarter GDP, durable goods orders, and consumer confidence.

Bond trading could also be impacted by reaction to the results of the Treasury Department's auctions of two-year, five-year and seven-year notes.

The Treasury is due to auction $26 billion worth of two-year notes next Tuesday, $35 billion worth of five-year notes next Wednesday and $29 billion worth of seven-year notes next Thursday.