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U.S. Treasury debt prices barely budged Friday as a rebound by stocks offset unexpectedly weak data on consumer sentiment.
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Solid earnings news from Walt Disney and JC Penney rekindled demand for U.S. equities after a six-day winning streak on the Dow ended Thursday.
A fall in Treasury prices earlier was cushioned by an unexpected drop in U.S. consumer confidence and a wider U.S. trade deficit in September. Imports grew 5.8 percent in September, the biggest monthly gain since March 1993.
The numbers affirmed the notion of a gradual U.S. economic recovery, which led the Federal Reserve to stick to its ultra-loose monetary policy to foster the growth that returned in the third quarter.
"These are disappointing numbers, but they are not going to change the broader picture. These are not the kind of numbers you want to trade on as long as the Fed is on hold and we could absorb the supply that supports the government's stimulus," said Larry Milstein, head of government and agency trading at R.W. Pressprich & Co. in New York.
The price on benchmark 10-year Treasury notes was unchanged at 99-14/32. Their yield which moves inversely to their price was 3.44 percent, unchanged from late Thursday.
As of late Friday morning, the 10-year yield was on track for a 6-basis-point fall for the week in the wake of solid bidding for a record $81 billion in supply.
Firm demand at the government's November refunding signaled investor confidence in the United States' credit-worthiness as the federal deficit ballooned due to the recession.
Against this backdrop, traders are monitoring U.S. President Barack Obama's visit to Japan and China, two of the biggest U.S. trading partners and holders of Treasurys.
US Consumers Stressed
Some U.S. industries have exhibited signs of improvement, while the euro zone recorded growth in the third quarter, the first positive reading since the first quarter of 2008.
But the U.S. consumer sector—which accounts for 70 percent of the world's biggest economy—is still struggling because of tight credit and the unemployment rate at a 26-year high.
The Reuters/University of Michigan index on U.S. consumer sentiment unexpectedly fell in early November. This reinforced the notion the world's largest economy is in need of continued monetary and perhaps more fiscal stimulus to sustain growth and forestall a double-dip recession.
Under this scenario, investors and traders said Treasury yields will stay within recent trading levels.
"We are going to be in a rangebound market into the end of the year," said Todd White, a portfolio manager with RiverSource Investments in Minneapolis.
Most analysts pegged the 10-year yield trading range at 3.25 percent to 3.75 percent.
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