2019.02.1515:25:00UTC+00Treasuries Pull Back Slightly Amid Optimism About Trade Talks

After moving notably higher over the course of the previous session, treasuries gave back some ground during trading on Friday.

Bond prices climbed well off their worst levels but still ended the day slightly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by nearly a basis point to 2.666 percent.

The pullback by treasuries came as safe havens such as bonds lost their appeal amid continued optimism about trade talks between the U.S. and China, the world's two largest economies.

A statement from the White House said high level U.S.-China trade talks this week led to "progress between the two parties" but noted "much work remains."

The White House said the U.S. hopes to see additional progress as discussions at the ministerial and vice-ministerial levels continue in Washington next week.

Optimism about the economic outlook was also generated by preliminary data from the University of Michigan showing a bigger than expected rebound in consumer sentiment in the month of February.

The report said the consumer sentiment index climbed to 95.5 in February after tumbling to 91.2 in January. Economists had expected the index to rise to 93.0.

Surveys of Consumers chief economist Richard Curtin said the rebound in consumer sentiment reflected the end of the partial government shutdown as well as a more fundamental shift in consumer expectations due to the Federal Reserve's pause in raising interest rates.

Meanwhile, traders largely shrugged off a report from the Federal Reserve showing an unexpected decrease in industrial production in January.

The Fed said industrial production fell by 0.6 percent in January after inching up by a downwardly revised 0.1 percent in December.

Economists had expected production to tick up by 0.1 percent compared to the 0.3 percent increase originally reported for the previous month.

The unexpected drop in industrial production came as manufacturing output slumped by 0.9 percent in January after climbing by 0.8 percent in December.

Following the holiday weekend, next week's trading may be impacted by reaction to reports on homebuilder confidence, durable goods orders and existing home sales.