Treasuries Show Strong Move Back To The Upside

After moving sharply lower over the two previous sessions, treasuries showed a strong move back to the upside during trading on Friday.

Bond prices surged early in the session and remained firmly positive throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.9 basis points to 3.964 percent.

With the steep drop on the day, the ten-year yield gave back ground after ending Thursday's trading above 4.0 percent for the first time since early last November.

The rebound by treasuries came amid easing concerns about the outlook for interest rates following recent comments from Federal Reserve officials and the latest economic data.

The Institute for Supply Management released a report this morning showing a very slight slowdown in the pace of growth in U.S. service sector activity in the month of February.

The ISM said its services PMI edged down to 55.1 in February from 55.2 in January, although a reading above 50 still indicates growth in the sector. Economists had expected the index to slip to 54.5.

The report also showed the prices index fell to 65.6 in February from 67.8 in January, pointing to a slowdown in the pace of price growth.

"Overall, there isn't much in the ISM services report to suggest the Fed needs to raise rates significantly higher than previously planned," said Andrew Hunter, Deputy Chief US Economist at Capital Economics.

Next week's trading is likely to be driven by reaction to congressional testimony by Federal Reserve Chair Jerome Powell as well as the closely watched monthly jobs report.

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