Treasuries Move Sharply Lower Ahead Of Next Week's Fed Meeting

(RTTNews) - Treasuries moved notably lower during trading on Friday, extending the downward move seen throughout the week.

Bond prices slid firmly into negative territory over the course of the morning before moving roughly sideways in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 7.5 basis points to 4.399 percent.

The ten-year yield closed higher for the fifth consecutive session, climbing well of the more than one-month closing low set a week ago.

The continued weakness among treasuries reflected concerns about the outlook for interest rates ahead of next week's Federal Reserve meeting.

While the Fed is still widely expected to lower interest rates by another 25 basis points, traders are likely to pay close attention to the accompanying statement for clues about future rate cuts.

Recent data showing inflation remains sticky has led to worries the Fed will lower rates slower than previously anticipated next year.

CME Group's FedWatch Tool is currently indicating a 97.1 percent chance the Fed will cut rates by a quarter point next week but an 81.0 percent chance the central bank will then leave rates unchanged in late January.

On the inflation front, the Labor Department released a report this morning showing import prices in the U.S. unexpectedly edged higher in the month of November.

The Labor Department said import prices crept up by 0.1 percent in November, matching the downwardly revised uptick in October.

Economists had expected import prices to dip by 0.2 percent compared to the 0.3 percent increase originally reported for the previous month.

Meanwhile, the report said export prices were unchanged in November after jumping by an upwardly revised 1.0 percent in October.

Export prices were expected to slip by 0.2 percent compared to the 0.8 percent advance originally reported for the previous month.

While the Fed's monetary policy decision will be in the spotlight next week, traders are also likely to keep an eye on reports on retail sales, industrial production, housing starts, existing home sales and personal income and spending.

The report on personal income and spending, which is scheduled to be released next Friday, includes the Fed's preferred readings on consumer price inflation.