Treasuries moved sharply lower over the course of the trading day on Wednesday, extending a recent downward move on the heels of the release of a batch of largely upbeat U.S. economic data.
After coming under considerable pressure in early trading, bond prices saw further downside as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 7.9 basis points to 1.805 percent.
With the increase on the day, the ten-year yield continued to recover from last month's record lows, reaching its highest closing level in three months.
The weakness among treasuries came on the heels of the release of some better than expected U.S. economic data, including a report from the Federal Reserve showing stronger than expected industrial production growth.
The Federal Reserve said industrial production increased by 0.6 percent in July compared to economist estimates for an increase of about 0.5 percent. The growth reflected increased output in each of the manufacturing, mining, and utilities sectors.
A separate report released by the National Association of Home Builders showed that its index of homebuilder confidence climbed to 37 in August from 35 in July. The increase came as a surprise to economists, who had expected the index to come in unchanged compared to the previous month.
With the unexpected increase, the homebuilder confidence index rose to its highest level since coming in at 39 in February of 2007.
Meanwhile, the New York Federal Reserve released a report showing an unexpected contraction in regional manufacturing activity.
The New York Fed said its general business conditions index dropped to a negative 5.9 in August from a positive 7.4 in July, with a negative reading indicating a contraction in regional manufacturing activity. Economists had expected the index to show a much more modest decrease to 7.0.
The Labor Department also released a report showing that consumer prices unexpectedly came in unchanged for the second consecutive month in July.
Another batch of key U.S. economic data is scheduled to be released on Thursday, with traders likely to keep an eye on reports on weekly jobless claims, housing starts, and Philadelphia-area manufacturing activity.
by RTT Staff Writer
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