Treasuries Give Back Ground Following Yesterday's Rally

(RTTNews) - Treasuries moved moderately lower over the course of the trading day on Thursday, giving back some ground after ending the previous session sharply higher.

Bond prices moved steadily lower as the day progressed, ending the day firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4 basis points to 2.748 percent.

With the increase on the day, the ten-year yield partly offset the 14.5 basis point loss posted on Wednesday, which pulled the yield down to a one-month closing low. The pullback by treasuries came as some traders cashed in on the previous session's rally, which came after the Federal Reserve unexpectedly refrained from scaling back its stimulus program.

The Fed said it would continue to purchase bonds at a pace of $85 billion per month, noting that it decided to wait for more evidence that economic progress will be sustained before adjusting the pace of its purchases.

In light of the Fed's focus on incoming data, some negative sentiment may also have been generated by a batch of largely upbeat economic reports.

The National Association of Realtors released a report early in the day showing that existing home sales reached their highest level in over six years in August.

NAR said existing home sales rose 1.7 percent to an annual rate of 5.48 million in August after jumping 6.5 percent to a rate of 5.39 million in July. The increase lifted existing home sales to their highest annual rate since February of 2007.

However, NAR chief economist Lawrence Yun suggested that the market may be experiencing a temporary peak, noting that several market frictions may lead to uneven sales in the months ahead.

The Philadelphia Federal Reserve also released a report showing that its index of regional manufacturing activity rose to a two-year high in September, while the Conference Board said its index of leading economic indicators rose slightly more than expected in August.

A lack of major economic news is likely to keep some traders on the sidelines on Friday, although trading may be impacted by speeches by several Fed officials.