Treasuries outlook: prices edge up as investors look to slew of US data

US Treasury debt prices rose on Friday after the previous day's sell-off, as investors covered short positions taken in the wake of a poor auction of US 30-year bonds. The US 30-year bond sale on Thursday resulted in a yield of 2.598 percent, about 3 basis points higher than what traders had expected. The lackluster auction pushed yields, which move inversely to prices, to their highest in three weeks on Thursday.
"After the tail yesterday, there were some dip buyers and other interest in the long end, especially going into next week, when we have some crucial data such as retail sales, producer and consumer prices," said Tyler Tucci, Treasury strategist at RBS Securities in Stamford, Connecticut.
"These numbers will really set the tone for the next few weeks as we get a snapshot of where inflation is."
Data on Friday showed inflation pressures remained benign, after import prices fell in March, which could prevent the Federal Reserve from raising interest rates in June.
In late trading, benchmark 10-year Treasuries prices were up 2/32 to yield 1.950 percent after a more than one-week high on Thursday.
US 30-year prices were up 8/32, yielding 2.582 percent, down from 2.6000 percent in the previous session. On Thursday, it hit its highest yield in about three weeks at 2.607 percent.
Richmond Fed President Jeffrey Lacker, a voting member of the Federal Open Market Committee and widely viewed as a hawk on inflation, said on Friday he saw no problem in hiking rates and then moving back to zero if needed. He added that there was a "pretty substantial amount" of support for a June rate hike at the March Fed policy setting meeting.
The market largely shrugged off his comments as yields stayed lower.
"The combination of the FOMC (Federal Open Market Committee) minutes from March and the soft non-farm payrolls have shifted the market's expectations of Fed liftoff-timing until later in the year," said analysts from CRT Capital in Stamfrod, Connecticut.
"Most continue to anticipate the Fed will commence with the first rate hike in 2015, although we're increasingly hearing chatter about people pushing off the assumed initial hike until Q1 of 2016 - but that's not consensus at this point.