Treasuries Finish Choppy Trading Session Roughly Flat

Treasuries showed a lack of direction throughout the trading session on Friday before eventually ending the day roughly flat.

Bond prices spent the day bouncing back and forth across the unchanged. The yield on the benchmark ten-year note, which moves opposite of its price, closed down less than a basis point at 4.441 percent.

After seeing initial strength, treasuries gave back ground following the release of a Commerce Department report showing unexpected increases in U.S. housing starts and building permits in the month of October.

The report said housing starts jumped by 1.9 percent to an annual rate of 1.372 million in October after surging by 3.1 percent to a downwardly revised rate of 1.346 million in September.

Economists had expected housing starts to dip to a rate of 1.350 million from the 1.358 million originally reported for the previous month.

The Commerce Department said building permits also shot up by 1.1 percent to an annual rate of 1.487 million in October after plunging by 4.5 percent to a revised rate of 1.471 million in September.

Building permits, an indicator of future housing demand, were expected to decrease to a rate of 1.450 million from the 1.475 million originally reported for the previous month.

Selling pressure remained subdued, however, as traders remain optimism about the outlook for interest rates following recent data showing signs of easing inflation.

The data has reinforced investors’ expectations that the Federal Reserve will refrain from raising interest rates over the next several months before cutting rates in mid-2024.

The Fed’s next monetary policy meeting is scheduled for December 12-13, with CME Group’s FedWatch Tool currently indicating a 100.0 percent chance the central bank will leave rates unchanged.

However, some economists have suggested Fed officials will maintain a somewhat hawkish tone to avoid the appearance of declaring victory over inflation too soon.

Next week’s trading may remain subdued due to the Thanksgiving Day holiday on Thursday, although reports on durable goods orders, existing home sales and weekly jobless claims may still attract attention along with the minutes of the latest Fed meeting.

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