Treasuries Close Moderately Lower But Well Off Worst Levels

(RTTNews) - Treasuries moved moderately lower during trading on Thursday but ended the session well off their worst levels of the day.

After coming under pressure in morning trading, bond prices regained some ground in the afternoon but remained in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.2 basis points to 2.393 percent.

The early weakness among treasuries came following the release of some upbeat U.S. economic data, with a report from the Commerce Department showing a bigger than expected increase in personal spending in May.

The report said personal spending jumped by 0.9 percent in May, reflecting the biggest increase in nearly six years. Spending had been expected to increase by 0.7 percent.

The increase in spending came amid continued growth in personal income, which rose by 0.5 percent for the second straight month. Economists had expected income to rise by 0.4 percent.

"We are finally seeing signs of consumers beginning to spend the gasoline savings they have been sitting on since the start of this year," said Paul Ashworth, Chief U.S. Economist at Capital Economics. "Moreover, spending is also being driven by a rapidly improving labor market."

A separate report from the Labor Department showed a modest increase in initial jobless claims in the week ended June 20th, although claims still came in below economist estimates.

However, treasuries regained some ground in the afternoon amid lingering concerns about Greece's inability to reach an agreement for additional aid from its international creditors.

The latest reports indicate that a Eurogroup meeting in Brussels to discuss proposals for Greece ended without an agreement, with European finance ministers set to hold their next session on Saturday.

Greece and its creditors are attempting to hammer out a deal that would allow the debt-laden country to avoid a default at the end of the month.

In other bond-related news, the Treasury Department finished off this week's series of long-term securities auctions with the sale of $29 billion worth of seven-year notes.

The seven-year note auction drew a high yield of 2.153 percent and a bid-to-cover ratio of 2.38, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.46.

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

Any headlines regarding the Greek negotiations are likely to be in focus on Friday, overshadowing a report on U.S. consumer sentiment.