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Treasuries Close Slightly Lower Following Volatile Session

Treasuries showed some significant swings over the course of the trading session on Friday before ending the day slightly lower.

Bond prices came under pressure in late morning trading but climbed back toward the unchanged in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1 basis point to 0.775 percent.

The volatility in the bond market came as traders reacted to the latest headlines regarding a new coronavirus stimulus bill.

Treasuries showed a notable move to the downside after President Donald Trump suggested he was once again in favor of a broad relief package.

“Covid Relief Negotiations are moving along. Go Big!” Trump tweeted before later telling Rush Limbaugh he would like to see a bigger stimulus package than either the Democrats or Republicans are offering.

Trump’s comments came amid reports that the White House was planning to offer a $1.8 trillion package, which is up from the administration’s previous $1.6 trillion proposal but still below the $2.2 trillion bill passed by House Democrats.

House Speaker Nancy Pelosi’s deputy chief of staff Drew Hammill later said Treasury Secretary Steven Mnuchin had “returned to the table with a proposal that attempted to address some of the concerns Democrats have.”

“Of special concern, is the absence of an agreement on a strategic plan to crush the virus,” Hammill tweeted. “For this and other provisions, we are still awaiting language from the Administration as negotiations on the overall funding amount continue.”

Meanwhile, amid the back-and-forth between the White House and Pelosi, Senate Majority Leader Mitch McConnell said a new relief bill is “unlikely” to pass before the elections.

“I’d like to see us rise above [politics] like we did back in March and April, but I think that’s unlikely in the next three weeks,” McConnell said.

Developments regarding a new stimulus bill are likely to remain in the spotlight next week, potentially overshadowing reports on consumer and producer price inflation, retail sales and industrial production.

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