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Treasuries Close Little Changed After Seeing Early Strength

After seeing modest strength in morning trading on Friday, treasuries gave back ground in the afternoon to end the day little changed.

Bond prices pulled back well off their best levels but still ended the day slightly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.709 percent.

The slight drop on the day came after the ten-year yield closed higher for five straight sessions, ending Thursday's trading at its highest closing level in nearly two months.

Treasuries initially benefited from bargain hunting following the release of a report from the Commerce Department showing retail sales jumped by less than expected in July amid a pullback in auto sales.

The Commerce Department said retail sales advanced by 1.2 percent in July after soaring by an upwardly revised 8.4 percent in June.

Economists had expected retail sales to jump by 1.9 percent compared to the 7.5 percent spike originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales surged up by 1.9 percent in July after skyrocketing by 8.3 percent in June. Ex-auto sales were expected to increase by 1.3 percent.

However, buying interest waned as the Federal Reserve released a report showing a jump in U.S. industrial production in the month of July that matched economist estimates.

The Fed said industrial production surged up by 3.0 percent in July after soaring by an upwardly revised 5.7 percent in June.

Economists had expected production to jump by 3.0 percent compared to the 5.4 percent spike originally reported for the previous month.

Despite the substantial increases seen over the past two months, the Fed noted production is still 8.4 percent below its pre-pandemic February level.

A preliminary reading released by the University of Michigan also unexpectedly showed a slight improvement in U.S. consumer sentiment in the month of August.

The report said the consumer sentiment index inched up to 72.8 in August from 72.5 in July. The uptick surprised economists, who had expected the index to edge down to 72.0.

Next week's trading may be impacted by reaction to a slew of housing data, including reports on homebuilder confidence, housing starts, and existing home sales.

Reports on regional manufacturing activity may also attract some attention along with the minutes of the Federal Reserve's latest monetary policy meeting.

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