Treasuries Regain Ground Following Recent Downtrend

(RTTNews) - After trending lower over the past several sessions, treasuries showed a notable move back to the upside during trading on Thursday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.4 basis points to 2.990 percent.

Bargain hunting likely contributed to the rebound by treasuries after the ten-year yield closed above the key 3 percent level for the first time in well over four years on Wednesday.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $29 billion worth of seven-year notes, which attracted slightly above average demand.

The seven-year note auction drew a high yield of 2.952 percent and a bid-to-cover ratio of 2.56, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.50.

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

Meanwhile, traders largely shrugged off the release of some upbeat economic data, including a report from the Labor Department showing initial jobless claims fell to their lowest level in nearly five decades in the week ended April 21st.

The report said initial jobless claims dropped to 209,000, a decrease of 24,000 from the previous week's revised level of 233,000. Economists had expected jobless claims to edge down to 230,000.

With the much bigger than expected decrease, jobless claims slid to their lowest level since hitting 202,000 in December of 1969.

A separate report from the Commerce Department showed another jump in orders for transportation equipment contributed to a bigger than expected increase in durable goods orders in the month of March.

The Commerce Department said durable goods orders surged up by 2.6 percent in March after spiking by an upwardly revised 3.5 percent in February.

Economists had expected durable goods orders to climb by 1.6 percent compared to the 3.0 percent jump that had been reported for the previous month.

Excluding the skyrocketing orders for transportation equipment, however, durable goods orders came in unchanged in March compared to a 0.9 percent increase in February. Ex-transportation orders had been expected to rise by 0.5 percent.

Trading on Friday may be impacted by reaction to a preliminary report on first quarter GDP as well as a revised report on consumer sentiment in April.