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Treasuries Close Modestly Higher Following Recent Weakness

Treasuries saw modest strength during trading on Friday, regaining some ground after trending lower over the past few sessions.

After moving higher over the course of the morning, bond prices gave back some ground in afternoon trading but still closed in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2 basis points to 1.708 percent.

With the drop on the day, the ten-year yield pulled back off the more than one-month closing high that it set in the previous session.

The modest strength among treasuries was partly due to lingering concerns about the looming fiscal cliff, with lawmakers in Washington continuing to struggle to reach an agreement.

While President Barack Obama and House Speaker John Boehner met at the White House yesterday evening, it is unclear if the two men were able to make any progress on narrowing the gap between their opposing budget proposals.

A joint statement described the 50-minute meeting as "frank" and said "the lines of communication remain open."

As a result of the focus on Washington, traders largely shrugged off the latest batch of economic data, including a report from the Federal Reserve showing a notable rebound in U.S. industrial production.

The report said industrial production surged up by 1.1 percent in November after falling by a downwardly revised 0.7 percent in October. Economists had expected production to increase by 0.3 percent compared to the 0.4 percent drop originally reported for the previous month.

The Federal Reserve said the rebound in production reflected a recovery in production for industries that were negatively affected by Hurricane Sandy.

Meanwhile, the Labor Department released a separate report showing a bigger than expected drop in U.S. consumer prices in the month of November.

Developments in Washington are likely to remain in focus next week as the year-end deadline to avoid the fiscal cliff draws ever closer.

Trading could also be impacted by the release of some key U.S. economic data, including reports on housing starts, existing home sales, and durable goods orders.

by RTT Staff Writer

For comments and feedback: editorial@rttnews.com

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