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Treasuries Extend Upward Move With Slightly Higher Close

After moving notably higher over the course of the previous session, treasuries saw some further upside during trading on Friday, although buying interest was subdued.

Bond prices hovered in positive territory for much of the session but closed only just above the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 1.711 percent.

The modest strength among treasuries was partly due to lingering concerns about the looming fiscal cliff, with lawmakers in Washington running out of time to reach a budget agreement.

With less than four days to go before the year-end deadline, President Barack Obama is holding a meeting with Congressional leaders.

Senate Majority Leader Harry Reid, D-Nev., Senate Minority Leader Mitch McConnell, R-Ken., House Speaker John Boehner, R-Ohio, and House Minority Leader Nancy Pelosi, D-Calif., are all at the White House along with Vice President Joe Biden.

A report from Bloomberg News indicated that President Obama intends to offer a "scaled-back budget offer" at the meeting.

Citing Democratic aides close to the talks, Bloomberg said the president's plan includes renewing the Bush-era tax cuts for the middle class, extending unemployment insurance benefits, heading off an expansion of the alternative minimum tax, and delaying or replacing parts of the scheduled spending cuts.

Unless an agreement is reached, approximately $600 billion in automatic tax increases and government spending cuts are due to go into effect at the end of the year.

As a result of the focus on Washington, traders largely shrugged off another batch of upbeat economic data, including a report from the National Association of Realtors showing that pending home sales rose to a two-year high in November.

The outcome of the last-minute budget negotiations is likely to be in focus early next week, with the U.S. currently due to go over the fiscal cliff next Tuesday.

Later in the week, trading could be impacted by the Labor Department's monthly jobs report as well as reports on national manufacturing and service sector activity.

by RTTNews Staff Writer

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