Treasuries moved notably lower during trading on Thursday, extending the downward move seen over the past several sessions.
After moving sharply lower in early trading, bond prices regained some ground in the afternoon but remained firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.8 basis points to 1.688 percent.
With the increase on the day, the ten-year yield closed higher for the third consecutive session, reaching a two-month closing high.
The weakness among treasuries came on the heels of the release of some relatively upbeat U.S. economic data, including a report from the Labor Department showing an unexpected drop in weekly jobless claims.
The report showed that initial jobless claims fell to 361,000 in the week ended August 4th from the previous week's revised figure of 367,000. Economists had expected jobless claims to edge up to 367,000 from the 365,000 originally reported for the previous week.
A separate report from the Commerce Department showed that the U.S. trade deficit narrowed to $42.9 billion in June from $48.0 billion in May. The trade deficit had been expected to narrow to $47.5 billion.
The narrower than expected trade deficit reflected an increase in the value of exports and a decrease in the value of imports.
Treasuries regained some ground following the release of the results of the Treasury Department's auction of 16 billion worth of thirty-year bonds even though demand for the auction came in below average.
The thirty-year bond auction drew a high yield of 2.825 percent and a bid-to-cover ratio of 2.41, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.68.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Peter Boockvar, managing director at Miller Tabak, said, "Following a weak ten-year note auction yesterday, the thirty-year results are soft too."
Trading activity may be somewhat subdued on Friday amid another relatively light day on the U.S. economic front. Nonetheless, the Labor Department's monthly report on import and exports prices may attract some attention.
by RTT Staff Writer
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