WASHINGTON -- Treasury bonds posted a small gain Friday despite the news that U.S. housing starts in November climbed to their highest level this year.
In very thin year-end trading, the benchmark 30-year bond was quoted up six ticks late Friday at a price of 95 27/32 with a 7.86% yield.
The 10-year note was unchanged at 100 13/32, yielding 7.81%. All other notes fell a few ticks. Bills also lost a little ground, with yields on three-month and six-month maturities rising to 5.72% and 6.51%, respectively.
The Commerce Department reported that housing starts unexpectedly surged 6.9% last month to a 1.54 million annual rate. This was the largest monthly gain in eight months and the highest level this year.
Favorable inflation reports earlier in the week coupled with traders digging in until the new year neutralized the impact of a housing starts report that might have otherwise knocked the stuffing out of bonds, analysts said.
"There's year-end positioning going on," said Kim Rupert, a senior economist with MMS International. "The market isn't looking at data right now."
Another calming influence is that most market participants now expect the Federal Reserve to defer another interest rate increase until next year, despite expected strong fourth quarter growth, observers noted.