Treasuries Close Modestly Lower Following Thirty-Year Bond Auction

(RTTNews) - Treasuries saw some volatility over the course of the trading day on Thursday before ending the session modestly lower.

Bond prices spent the day bouncing back and forth across the unchanged line but remained stuck in the red going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.2 basis points to 2.602 percent.

The modestly lower close by treasuries was partly in reaction to the disappointing results of the Treasury Department's auction of $16 billion worth of thirty-year bonds.

The thirty-year bond auction drew a high yield of 3.44 percent and a bid-to-cover ratio of 2.09. The yield was the lowest since June, while the bid-to-cover ratio was below the twelve-month average of 2.39.

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

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, at least for today, it looks like we've pushed the envelope a bit too far in this drop in longer end yields."

"For all the talk of pension funds being big buyers at this end of the curve, which maybe they've been, [they] didn't seem to care much at this auction and at this yield and price," he added.

On the economic front, the Labor Department released a report early in the day showing that initial jobless claims pulled back by more than expected in the week ended May 3rd.

The Labor Department said initial jobless claims fell to 319,000, a decrease of 26,000 from the previous week's revised level of 345,000. Economists had expected jobless claims to drop to 325,000.

Trading on Friday may be somewhat subdued amid a relatively quiet day on the economic front. The Commerce Department is due to release it report on wholesale inventories in March, but the data is not likely to attract much attention.