Treasuries Show Notable Pullback Following Hawkish Comments From Fed Officials

(RTTNews) - After moving sharply higher over the past several sessions, treasuries showed a significant pullback during trading on Thursday.

Bond prices came under pressure in early trading and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 8.3 basis points to 3.775 percent.

With the increase, the ten-year yield regained ground after ending the previous session at its lowest closing level in well over a month.

The pullback by treasuries came as hawkish comments from Federal Reserve officials dented recent optimism about the outlook for interest rates.

In remarks at an event hosted by Greater Louisville Inc., St. Louis Fed President James Bullard suggested the central bank's aggressive interest rate hikes have had "only limited effects on observed inflation."

Bullard said the Fed will need to continue increasing interest rates to reach a level that could be considered "sufficiently restrictive."

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits edged slightly lower in the week ended November 12th.

The report said initial jobless claims dipped to 222,000, a decrease of 4,000 from the previous week's revised level of 226,000.

Economists had expected jobless claims to come in unchanged compared to the 225,000 originally reported for the previous week.

A separate report from the Commerce Department showed a notable decrease in new residential construction in the month of October.

The report said housing starts tumbled by 4.2 percent to an annual rate of 1.425 million in October after falling by 1.3 percent to an upwardly revised rate of 1.488 million in September.

Economists had expected housing starts to slump by 2.0 percent to an annual rate of 1.410 million from the 1.439 million originally reported for the previous month.

The Commerce Department said building permits also dove by 2.4 percent to an annual rate of 1.526 million in October after jumping by 1.4 percent to a rate of 1.564 million in September.

Building permits, an indicator of future housing demand, were expected to plunge by 3.3 percent to an annual rate of 1.512 million.

The Philadelphia Federal Reserve also released a report showing regional manufacturing unexpectedly contracted at a faster rate in the month of November.

Trading on Friday may be impacted by reaction to reports on existing home sales and leading economic indicators, although activity may be somewhat subdued following recent volatility.