After moving sharply higher over the past few sessions, treasuries turned in a relatively lackluster performance during trading on Friday.<\/p>\n
Bond prices spent the day bouncing back and forth across the unchanged line before closing roughly flat. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.928 percent.<\/p>\n
The choppy trading on the day as traders took a breather following the recent surge by treasuries, which has driven the ten-year yield down to its lowest levels since late July.<\/p>\n
Optimism about the outlook for interest rates has contributed to the recent strength among treasuries, although hopes for near-term interest rate cuts were partly offset by comments from New York Federal Reserve President John Williams.<\/p>\n
Williams told CNBC’s “Squawk Box” the Fed is not “really talking about rate cuts right now” and is focused on whether monetary policy is sufficiently restrictive to ensure inflation comes back down to 2 percent.<\/p>\n
Nonetheless, the chances of a quarter point rate cut in March have jumped to 61.6 percent, according to CME Group’s FedWatch Tool.<\/p>\n
On the U.S. economic front, the Federal Reserve released a report showing a modest rebound in U.S. industrial production in the month of November.<\/p>\n
The report said industrial production rose by 0.2 percent in November after slumping by a downwardly revised 0.9 percent in October.<\/p>\n
Economists had expected industrial production to climb by 0.3 percent compared to the 0.6 percent decrease originally reported for the previous month.<\/p>\n
The rebound in industrial production came as manufacturing output increased by 0.3 percent in November after plunging by 1.2 percent in October following the resolution of strikes at several major automakers.<\/p>\n
Reaction to reports on personal income and spending, durable goods orders, housing starts and new and existing home sales may impact next week’s trading. <\/p>\n