WASHINGTON (dpa-AFX) - After showing a lack of direction early in the session, treasuries came under pressure over the course of the trading day on Friday.
Bond prices slid more firmly into negative territory in afternoon trading after spending the morning lingering near the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.4 basis points to 3.911 percent.
With the upward move, the ten-year yield closed higher for the fifth consecutive session, reaching its highest closing level in two weeks.
The continued weakness among treasuries came after the Commerce Department released readings on U.S. consumer price inflation that are said to be preferred by the Federal Reserve.
The Commerce Department report showed consumer prices increased in line with economist estimates in the month of July, while the annual rate of price growth was unexpectedly flat.
The report said the personal consumption expenditures (PCE) price index rose by 0.2 percent in July after inching up by 0.1 percent in June. The modest increase matched expectations.
The core PCE price index, which excludes food and energy prices, also crept up by 0.2 percent in July. The uptick matched the increase seen in June as well as economist estimates.
Meanwhile, the report said the annual rates of growth by the PCE price index and the core PCE price index were both unchanged at 2.5 percent and 2.6 percent, respectively.
Economists had expected the year-over-year growth by both the PCE price index and the core PCE price index to tick up by 0.1 percentage point.
While the data reinforced expectations of an interest rate cut by the Fed next month, some analysts, such as Harris Financial Group managing partner Jamie Cox, have said there is no justification for a 50 basis point rate cut.
Trades may have felt a 25 basis point rate cut in September is already priced into the bond market, leading to the extended pullback by treasuries.
According to CME Group's FedWatch Tool, there is a 69.5 percent chance of a quarter point rate cut next month and a 30.5 percent chance of a half point rate cut.
However, ING Chief International Economist James Knightley said, 'A soft jobs report [next week] could still tip the odds in favour of a 50bp rate cut'
Following the Labor Day holiday on Monday, the monthly jobs report is likely to be in focus next week, while reports on manufacturing and service sector activity may also attract attention along with the Fed's Beige Book.
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