Treasuries Show Modest Move Back To The Downside

(RTTNews) - Treasuries saw modest weakness during trading on Thursday, offsetting the uptick seen over the course of the previous session.

Bond prices moved to the downside in early trading and remained stuck in the red throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, crept up by 1.9 basis points to 1.781 percent.

The pullback by treasuries came as traders digested the latest batch of U.S. economic data, including a Labor Department report showing tame consumer price inflation.

The Labor Department said its consumer price index inched up by 0.1 percent in March after dipping by 0.2 percent in February. Economists had expected the index to rise by 0.2 percent.

Excluding food and energy prices, core consumer prices also edged up by 0.1 percent in March compared to economist estimates for a 0.2 percent increase.

On an annual basis, the pace of consumer price growth slowed to 0.9 percent in March from 1.0 in February, and the pace of core price growth slowed to 2.2 percent from 2.3 percent.

A separate report from the Labor Department showed an unexpected drop in initial jobless claims in the week ended April 9th.

The report said initial jobless claims fell to 253,000, a decrease of 13,000 from the previous week's revised level of 266,000.

The drop came as a surprise to economists, who had expected jobless claims to inch up to 270,000 from the 267,000 originally reported for the previous week.

Treasuries remained in negative territory even after the Treasury Department revealed that its auction of $12 billion worth of thirty-year bonds attracted slightly above average demand.

The thirty-year bond auction drew a high yield of 2.596 percent and a bid-to-cover ratio of 2.40, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.36.

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

Today's thirty-year bond auction came after the Treasury sold $24 billion worth of three-year notes on Tuesday and $20 billion worth of ten-year notes on Wednesday.

Another batch of U.S. economic data may attract some attention on Friday, with traders likely to keep an eye on reports on industrial production, consumer sentiment, and New York manufacturing activity.