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Treasuries Close Roughly Flat Following Lackluster Session

Treasuries showed a lack of direction over the course of the trading session on Friday before ending the day roughly flat.

After rebounding from an initial move to the downside, bond prices drifted back toward the unchanged line as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.933 percent.

Despite the lackluster performance, the modest uptick lifted the ten-year yield to its highest closing level in over three months.

The choppy trading on the day came as traders digested conflicting information regarding negotiations of a U.S.-China trade deal.

A Chinese Commerce Ministry spokesman said Thursday that the U.S. and China had agreed to roll back existing tariffs as part of a phase one trade deal.

However, President Donald Trump told reporters at the White House on Friday that he has not agreed to lift the tariffs on China.

The comments from Trump came after a report from Reuters said the idea of rolling back tariffs faces fierce internal opposition from the president's advisers.

Multiple sources familiar with the talks told Reuters the idea of a tariff rollback was not part of the original October "handshake" deal between Trump and Chinese Vice Premier Liu He.

Citing current and former administration officials, Reuters said there is a divide within the administration over whether rolling back tariffs will give away U.S. leverage in the negotiations.

The latest reports have sparked renewed uncertainty about what type of trade deal Trump will ultimately be willing to accept.

Trump has repeatedly criticized past administrations for being too weak on China, but he would also like a big political victory ahead of next year's presidential election.

Meanwhile, traders largely shrugged off a report from the University of Michigan showing a slight improvement in U.S. consumer sentiment in the month of November.

The report said the consumer sentiment index inched up to 95.7 in November after rising to 95.5 in October. Economists had expected to index to tick up to 95.9.

"The early November reading on consumer sentiment was nearly identical to last month's and the average 2019 level (95.6)," said Surveys of Consumers chief economist Richard Curtin.

He added, "Consumers did voice a slightly more positive outlook for the economy, which was offset by a slightly less favorable outlook for their own personal finances."

Curtin said one-in-four consumers spontaneously made negative references to tariffs but noted references to the impact of Trump's impeachment on economic prospects were virtually non-existent.

Reports on consumer and producer price inflation, retail sales and industrial production may attract some attention next week, although traders are likely to keep a closer eye on developments on the trade front.

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