Treasuries Move Higher In Reaction To Economic Data

(RTTNews) - After ending the previous session modestly higher, treasuries saw some further upside over the course of the trading day on Thursday.

Bond prices initially showed a lack of direction but climbed firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.6 basis points to 2.185 percent.

The strength among treasuries came as traders reacted to the latest batch of U.S. economic data, including a report from the National Association of Realtors showing an unexpected drop in existing home sales.

NAR said existing home sales fell 3.3 percent to an annual rate of 5.04 million in April from an upwardly revised 5.21 million in March.

The decrease came as a surprise to economists, who had expected existing home sales to edge up to 5.24 million from the 5.19 million originally reported for the previous month.

Lawrence Yun, NAR chief economist, said, "April's setback is the result of lagging supply relative to demand and the upward pressure it's putting on prices."

A separate report from the Philadelphia Federal Reserve showed an unexpected decrease by its index of regional manufacturing activity.

The Philly Fed said its diffusion index of current activity dipped to 6.7 in May from 7.5 in April. While a positive reading indicates growth, economists had expected the index to inch up to 8.0.

Meanwhile, traders largely shrugged off a report from the Conference Board showing that its index of leading economic indicators rose by much more than expected in April.

The Conference Board said its leading economic index advanced by 0.7 percent in April after climbing by an upwardly revised 0.4 percent in March. Economists had expected the index to rise by 0.3 percent.

"April's sharp increase in the LEI seems to have helped stabilize its slowing trend, suggesting the paltry economic growth in the first quarter may be temporary," said Ataman Ozyildirim, Economist at The Conference Board.

Economic data is likely to remain in focus on Friday, with traders likely to keep a close eye on the Labor Department's report on consumer price inflation.

Remarks by Federal Reserve Chair Janet Yellen are also likely to attract attention, with the Fed chief due to deliver a speech on the economic outlook in Providence, Rhode Island.