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Treasuries Move Back To The Downside Following GDP Data

After moving higher over the course of the previous session, treasuries moved back to the downside during trading on Friday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.1 basis points to 2.662 percent.

The pullback by treasuries came as a Commerce Department report showed slower than expected economic growth in the fourth quarter, but economists recommended looking past the headline number.

The report said real gross domestic product increased by 2.6 percent in the fourth quarter compared to the 3.2 percent growth seen in the third quarter. Economists had expected GDP to climb by 3.0 percent.

While the pace of GDP growth slowed more than expected, final sales climbed by 3.2 percent and final sales to domestic purchasers jumped by 4.3 percent.

"In other words, despite the weak headline, this is not a weak report," said Chris Low, chief economist at FTN Financial.

A separate report from the Commerce Department showed a much bigger than expected increase in durable goods orders in the month of December.

The Commerce Department said durable goods orders spiked by 2.9 percent in December after surging up by an upwardly revised 1.7 percent in November.

Economists had expected durable goods orders to climb by 0.8 percent compared to the 1.3 percent jump that had been reported for the previous month.

Excluding an increase in orders for transportation equipment, durable goods orders rose by 0.6 percent in December after edging up by 0.3 percent in November.

Ex-transportation orders had been expected to climb by 0.5 percent compared to the 0.1 percent drop originally reported for the previous month.

Traders were also reacting to President Donald Trump's highly anticipated speech at the World Economic Forum in Davos, Switzerland.

Trump touted the progress made by the economy and the stock markets since his election and reiterated his pledge to put "America first."

"But America first does not mean America alone," Trump said. "When the United States grows, so does the world."

Next week's trading may be impacted by reaction to the Federal Reserve's monetary policy announcement scheduled for next Wednesday.

The closely watched monthly jobs report is also likely to attract attention along with reports on personal income and spending, consumer confidence, pending home sales, and manufacturing activity.

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