Treasuries Extend Pullback Amid Worries About Higher Rates

After initially showing a lack of direction, treasuries moved to the downside over the course of the trading session on Friday.

Bond prices came under pressure as the morning progressed and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose 4.3 basis points to 3.818 percent.

The ten-year yield added to the 8.3 basis point increase seen on Thursday, continuing to regain ground after ending Wednesday’s trading at its lowest closing level in over a month.

The continued pullback by treasuries came as traders continued to express concerns about the outlook for interest rates following recent comments from Federal Reserve officials.

While the Fed is still widely expected to slow the pace of rate hikes next month, the recent comments have led to worries about how high the central bank will eventually take rates.

Meanwhile, traders largely shrugged off some disappointing economic data, including a report from the National Association of Realtors showing a substantial decrease in existing home sales in the month of October.

NAR said existing home sales plummeted by 5.9 percent to an annual rate of 4.43 million in October after slumping by 1.5 percent to a rate of 4.71 million in September.

Existing home sales decreased for the ninth consecutive month, resulting in a 28.4 percent nosedive compared to the same month a year ago.

A separate report released by the Conference Board showed a much bigger than expected decrease by its reading on leading U.S. economic indicators in the month of October.

The Conference Board said its leading economic slumped by 0.8 percent in October after falling by a revised 0.5 percent in September. Economists had expected the index to decrease by 0.4 percent, matching the drop originally reported for the previous month.

Noting the index fell for the eight straight month, Ataman Ozyildirim, Senior Director, Economics, at The Conference Board, said the data suggests the economy is “possibly in a recession.”

The Thanksgiving Day holiday may lead to light trading activity next week, although traders are still likely to keep an eye on reports on durable goods and new home sales as well as the minutes of the latest Fed meeting.

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