Treasuries Close Moderately Higher Following 30-Year Bond Auction

(RTTNews) - Treasuries saw some volatility over the course of the trading day on Thursday before ending the session moderately higher.

After seeing early strength, bond prices pulled back near the unchanged line but moved back to the upside in afternoon trading. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3 basis points to 2.963 percent.

The higher close for treasuries was partly due to a positive reaction to the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 3.899 percent and a bid-to-cover ratio of 2.57, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.38.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

"Following a weak 3-year note auction and a mediocre 10-year auction, the 30-year bond auction was good," said Peter Boockvar, chief market analyst at the Lindsey Group. "Bottom line, a yield near the highest in 2 1/2 years brought out better demand."

Today's thirty-year bond auction came after the Treasury sold $30 billion worth of three-year notes on Tuesday and $21 billion worth of ten-year notes on Wednesday.

Meanwhile, traders largely shrugged off a report from the Labor Department showing that initial jobless claims fell by more than expected in the week ended January 4th.

The report said jobless claims dropped to 330,000 from the previous week's revised figure of 345,000, while economists had expected jobless claims to fall to 335,000.

Trading on Friday is likely to be driven by reaction to the Labor Department's monthly jobs report. Economists expect an increase of about 200,000 jobs in December, while the unemployment rate is expected to remain at 7.0 percent.