Treasuries Show Notable Move Back To The Downside

After turning higher over the course of the previous session, treasuries showed a notable move 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, climbed 4.8 basis points to 2.895 percent.

The pullback by treasuries came even though President Donald Trump continued to urge the Federal Reserve to refrain from raising interest rates.

Trump suggested the Fed's plan to gradually raise rates could hurt recent economic progress, claiming the rate hikes penalize the U.S. for doing well.

"The United States should not be penalized because we are doing so well," Trump tweeted. "Tightening now hurts all that we have done."

He added, "The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?"

In an interview with CNBC, Trump also indicated a willingness to impose tariffs on all Chinese imports to the U.S.

"I'm ready to go to 500," Trump said, apparently referring to the $505.5 billion of Chinese imports to the U.S. in 2017.

"I'm not doing this for politics, I'm doing this to do the right thing for our country," Trump said. "We have been ripped off by China for a long time."

The Trump administration previously imposed tariffs of $34 billion worth of Chinese imports and has threatened to impose tariffs on another $200 billion worth of goods.

Trump argued the strength in the stock market since his election has allowed him to be more aggressive on trade, claiming, "We're playing with the bank's money."

Next week's trading may be impacted by reaction to the latest economic data, including reports on new and existing home sales, durable goods orders, and the preliminary reading on second quarter GDP.

Bond traders are also likely to keep an eye on the results of the Treasury Department's auctions of two-year, five-year, and seven-year notes.

The Treasury said it plans to sell $35 billion worth of two-year notes next Tuesday, $36 billion worth of five-year notes next Wednesday and $30 billion worth of seven-year notes next Thursday.

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