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Treasuries Come Under Pressure Amid Progress In U.S.-China Trade Talks

After initially showing a lack of direction, treasuries slid more firmly into negative territory over the course of the trading day on Friday.

Bond prices moved roughly sideways in afternoon trading, stuck in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 1.801 percent.

With the increase on the day, the ten-year yield closed above 1.8 percent for the first time in well over a month.

Treasuries came under pressure after a statement from the U.S. Trade Representative's office said the U.S. and China have made progress toward finalizing a phase one trade deal.

The statement was released by the USTR following a phone call between U.S. Trade Representative Robert Lighthizer, Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He.

"They made headway on specific issues and the two sides are close to finalizing some sections of the agreement," the USTR said. "Discussions will go on continuously at the deputy level, and the principals will have another call in the near future."

On the U.S. economic front, revised data released by the University of Michigan showed consumer sentiment improved by slightly less than initially estimated in the month of October.

The report said the consumer sentiment index for October was downwardly revised to 95.5 from the preliminary reading of 96.0. Economists had expected the index to be unrevised.

Despite the downward revision, the consumer sentiment index for October was still up from the final September reading of 93.2.

"Sentiment was insignificantly below the mid month level, with the small loss spread over most components of the Index," said Surveys of Consumers chief economist Richard Curtin.

He added, "The overall level of consumer confidence has remained quite favorable and largely unchanged during the past few years."

The Federal Reserve's monetary policy decision is likely to be in focus next week, with CME Group's FedWatch tool currently indicating a 93.5 percent chance of another quarter point interest rate cut.

The monthly jobs report is also likely to attract some attention along with reports on third quarter GDP, personal income and spending and manufacturing activity.

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