Treasuries Climb Off Worst Levels But Close Modestly Lower

(RTTNews) - After trending higher over the past several sessions, treasuries gave back some ground during the trading day on Wednesday.

Bond prices came under pressure in morning trading but climbed well off their worst levels in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of prices, edged up by 1.3 basis points to 3.061 percent.

The modest increase by the ten-year yield came after the slight drop seen on Tuesday pulled the yield down to a two-month closing low.

Profit taking contributed to the pullback by treasuries, as traders cashed in on some of the recent strength among bonds.

A rebound on Wall Street also inspired some traders to move their money out of treasuries, although selling pressure was subdued ahead of the Thanksgiving Day holiday on Thursday.

Disappointing economic data may also have helped limit the downside for treasuries, with a Commerce Department report showing a much steeper than expected drop in durable goods orders in October.

The Commerce Department said durable goods orders plunged by 4.4 percent in October following a revised 0.1 percent dip in September.

Economists had expected orders to slump by 2.5 percent compared to the 0.7 percent increase that had been reported for the previous month.

Excluding a steep drop in orders for transportation equipment, durable goods orders inched up by 0.1 percent in October after a revised 0.6 percent decrease in September.

Ex-transportation orders had been expected to rise by 0.4 percent compared to the 0.1 percent uptick originally reported for the previous month.

A separate report from the Labor Department showed first-time claims for U.S. unemployment benefits unexpectedly edged higher in the week ended November 17th.

The report said initial jobless claims rose to 224,000, an increase of 3,000 from the previous week's upwardly revised level of 221,000.

Economists had expected jobless claims to slip to 215,000 from the 216,000 originally reported for the previous week.

Meanwhile, the National Association of Realtors released a report showing a bigger than expected rebound in existing home sales in the month of October.

NAR said existing home sales surged up by 1.4 percent to an annual rate of 5.22 million in October after plunging by 3.4 percent to a rate of 5.15 million in September. Economists had expected existing home sales to jump by 1.0 percent.

Following the Thanksgiving Day holiday, trading activity is likely to remain subdued on Friday ahead of an early close by the bond markets. A lack of major U.S. economic news is likely to help keep traders on the sidelines.