Treasuries Move Back To The Downside After Yesterday's Recovery

(RTTNews) - After turning higher over the course of the previous session, treasuries moved back to the downside during trading on Thursday.

Bond prices came under pressure in early trading and remained stuck in the red throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 4.1 basis points to 2.222 percent.

With the sizable increase on the day, the ten-year yield ended the session at its highest closing level in a month.

The pullback by treasuries came as traders digested the latest batch of U.S. economic data, including the Labor Department's report on initial jobless claims in the week ended September 6th.

The report showed that jobless claims fell in line with economist estimates, dropping to 275,000 from the previous week's revised level of 281,000.

A separate report from the Labor Department showed that U.S. import prices fell more than expected in August amid another substantial decrease in fuel prices.

The Labor Department said import prices tumbled by 1.8 percent in August following an unrevised 0.9 percent decrease in July. Economists had expected import prices to drop by 1.6 percent.

The report also showed a steep drop in export prices, which slumped by 1.4 percent in August after falling by a revised 0.4 percent in July. Export prices had been expected to edge down by 0.4 percent.

The Commerce Department also released a report unexpectedly showing a modest drop in wholesale inventories in the month of July.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds, which attracted strong demand.

The thirty-year bond auction drew a high yield of 2.980 percent and a bid-to-cover ratio of 2.54, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.32.

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

Reaction to the Labor Department's report on wholesale price inflation may attract some attention on Friday along with the University of Michigan's preliminary report on consumer sentiment.