Treasuries Climb Well Off Lows But Remain Stuck In The Red

(RTTNews) - After falling sharply in early trading, treasuries regained some ground over the course of the session but still closed in the red.

Bond prices climbed well off their worst levels, ending the day moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.3 basis points to 2.755 percent after reaching a high of 2.805 percent.

While the ten-year yield ended the session well off its intraday highs, the gain on the day still lifted the yield to a new two-year closing high.

The early weakness among treasuries came following the release of a slew of economic data, including a report from the Labor Department showing that initial jobless claims fell to their lowest level in almost six years.

The Labor Department said initial jobless claims fell to 320,000 in the week ended August 10th, a decrease of 15,000 from the previous week's revised figure of 335,000. Economists had expected jobless claims to edge down to 330,000.

With the bigger than expected decrease, initial jobless claims fell to their lowest level since hitting 316,000 in the week ended October 6, 2007.

The data provided further evidence of improvement in the job market, adding to concerns about the Federal Reserve scaling back its stimulus program at its next meeting.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "The continued reduction in the pace of firing's to the slowest since the Fall of 2007 should point the Fed further into the camp of taper sooner rather than later."

The recovery attempt seen over the course of the session came as traders also digested weaker than expected readings on manufacturing activity in the New York and Philadelphia areas in August as well as a Fed report showing that industrial production was unchanged in July.

Nonetheless, buying interest remained relatively subdued amid the release of a report from the National Association of Home Builders showing homebuilder confidence at a nearly eight-year high in August.

Trading on Friday may be impacted by another batch of economic data, including reports on housing starts, labor productivity, and consumer sentiment.