Treasurys fall for first session in three

NEW YORK (MarketWatch) — Treasury prices held losses Friday after a round of disappointing economic data, as the market took a breather following two days of gains.

The benchmark 10-year note (10_YEAR)  yield, which moves inversely to price, rose 2 basis points to 2.712%, after a two-session drop of 8.5 basis points.

The 30-year bond (30_YEAR)  yield rose 1 basis point to 3.800%, and the 5-year note (5_YEAR)  yield rose 2.5 basis points to 1.353%.

Stocks traded higher.

Getty Images Enlarge Image Janet Yellen testifies during her confirmation hearing Thursday.

"For the most part the market is still bullish over the remarks of Yellen. It's probably just a slight correction heading into the weekend," said David Coard, head of fixed-income sales and trading at Williams Capital Group.

The market continued to dig through the testimony from President Obama's nominee to lead the Federal Reserve. Janet Yellen, currently vice chair of the Fed, went before the Senate Banking Committee Thursday as she seeks confirmation to succeed Ben Bernanke as Fed chief.

Her comments raised expectations that the Fed is not in a hurry to scale back, or taper, its bond-buying program. "The probability of December tapering has shifted this week, from just under 2:1 earlier this week to more like 4:1 odds against tapering today," said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities, in a note.

The Wall Street Journal's Jon Hilsenrath, an influential Fed watcher, suggested Yellen was on board to begin scaling back the program "in the coming months," which was a less dovish assessment than the market interpreted, according to Gilhooly.

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Changes to monetary policy hinge upon improvement in economic data, and a series of indicators came in below expectations Friday. The Empire State index turned negative in November for the first time in six months, with a reading of minus 2.2. Economists polled by MarketWatch had expected a positive 5.5 reading on the business conditions indicator.

U.S. import prices fell by 0.7% in October due to a drop in fuel prices. That compares with expectations of a 0.4% drop. Prices were unchanged when fuel prices were stripped out.

Industrial production fell 0.1% in October, the first drop since July as mining and utilities activity dropped. Wholesale investors climbed 0.4% in September.