Treasuries Close Higher Following Disappointing Economic Data

(RTTNews) - Treasuries fluctuated over the course of a holiday-shortened trading session on Thursday but remained mostly positive.

After seeing early strength, treasuries pulled back near the unchanged line before rebounding going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.269 percent.

The higher close by treasuries was partly in reaction to the release of some disappointing U.S. economic data.

The Labor Department released a report this morning showing a bigger than expected increase in initial jobless claims in the week ended December 26th.

The report said initial jobless claims climbed to 287,000, an increase of 20,000 from the previous week's unrevised level of 267,000. Economists had expected jobless claims to edge up to 270,000.

With the bigger than expected increase, jobless claims rose to their highest level since hitting 296,000 in the week ended July 4th.

A separate report from MNI Indicators said Chicago-area business activity unexpectedly contracted at a faster pace in December.

MNI Indicators said its Chicago business barometer dropped to 42.9 in December from 48.7 in November, with a reading below 50 indicating a contraction in activity.

The decrease by the business barometer came as a surprise to economists, who had expected the index to climb to 50.0. The unexpected drop pulled the barometer down to its lowest level since July of 2009.

Nonetheless, trading activity was relatively subdued, with many traders away from their desks on New Year's Eve.

Following the long holiday weekend, trading activity is likely to return to normal next week amid the release of several key economic reports.

The monthly jobs report due next Friday may be in the spotlight, although traders are also likely to keep an eye on reports on manufacturing and service sector activity, the trade deficit and factory orders.

The Federal Reserve is also scheduled to release the minutes of its most recent monetary policy meeting, when the central bank decided to raise interest rates for the first time in nearly a decade.