Treasuries Close Roughly Flat Following Inflation Data

Treasuries showed a lack of direction over the course of the trading session on Friday before ending the roughly flat.

Bond prices spent the day bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.489 percent.

The lackluster performance on the day came after the Labor Department released a report showing U.S. consumer prices surged at the fastest annual rate of in nearly 40 years in November.

The report showed the annual rate of growth in consumer prices accelerated to 6.8 percent in November from 6.2 percent in October, reflecting the biggest jump since June of 1982.

Core consumer prices, which exclude food and energy prices, were up by 4.9 percent compared to the same month a year ago, showing the biggest annual increase since June of 1991.

The faster annual growth came as consumer prices climbed by 0.8 percent in November following a 0.9 percent advance in October. Economists had expected consumer prices to increase by 0.7 percent.

Core consumer prices rose by 0.5 percent in November after climbing by 0.6 percent in October. The increase in core prices matched economist estimates.

While the elevated rate of inflation may lead the Federal Reserve to accelerate the pace of tapering its asset purchases next week, traders seemed relieved that the price growth was not even faster.

A separate report from the University of Michigan showed consumer sentiment in the U.S. unexpectedly improved in early December.

The report said the consumer sentiment index climbed to 70.4 in December after dropping to a ten-year low of 67.4 in November. The rebound surprised economists, who had expected the index to edge down to 67.1.

The Fed’s monetary policy meeting is likely to be in the spotlight next week, overshadowing a slew of reports on producer price inflation, import and export prices, retail sales, housing starts and industrial production.