Treasuries Close Firmly Negative Ahead Of ECB Announcement

(RTTNews) - After moving modestly higher in early trading on Wednesday, treasuries came under pressure over the course of the session.

Bond prices slid firmly into negative territory before moving roughly sideways in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.6 basis points to 1.853 percent.

The pullback by treasuries came as traders looked ahead to tomorrow's monetary policy announcement from the European Central Bank, which is expected to unveil additional stimulus.

Reports have indicated that the ECB's Executive Board has proposed purchasing 50 billion euros worth of bonds per month until the end of 2016.

Jonathan Loynes, Chief European Economist at Capital Economics, said the reports suggest the ECB is set to announce a bigger quantitative easing program than has generally been anticipated

"Of course, we don't know if these reports will prove to be correct," Loynes said. "If they don't, they have further raised the scope for a major disappointment tomorrow."

He added, "Even if they are right though, there are reasons to remain cautious about QE's likely effectiveness."

Meanwhile, the Commerce Department released a report this morning showing a notable rebound in U.S. housing starts in the month of December.

The report said housing starts jumped 4.4 percent to an annual rate of 1.089 million in December from the revised November estimate of 1.043 million. Economists had expected starts to climb 1.3 percent.

The ECB announcement is likely to be in spotlight on Thursday, overshadowing the Labor Department's weekly jobless claims report.