Treasuries Close Notably Higher After Surprise Swiss Rate Cut

(RTTNews) - Treasuries showed another strong move to the upside during trading on Thursday in reaction to a surprise move by the Swiss National Bank.

Bond prices moved steadily higher for much of the session before moving roughly sideways going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.2 basis points to 1.775 percent.

With the drop, the ten-year yield closed lower for the thirteenth time in fourteen sessions, hitting its lowest closing level since May of 2013.

The strength among treasuries came on the heels of news that the Swiss National Bank unexpectedly decided to discontinue its currency ceiling.

The SNB abandoned its currency ceiling of 1.2 Swiss francs per euro as it considers it "no longer justified."

The central bank subsequently lowered interest rates further into negative territory to make sure that the termination of the "minimum exchange rate does not lead to an inappropriate tightening of monetary conditions."

The SNB slashed the interest rate on sight deposit account balances that exceed a given exemption threshold by 50 basis points to -0.75 percent.

Treasuries also benefited from a sharp pullback by the price of crude oil as well as a slew of U.S. economic data.

The Labor Department released a report this morning showing that producer prices fell at their fastest rate in over three years in December, although the drop was still smaller than economists had expected.

The report said the producer price index for final demand fell by 0.3 percent in December, while economists had expected the index to decrease by 0.4 percent.

Excluding food and energy prices, the core producer price index rose by 0.3 percent in December after coming in unchanged in the previous month. The increase exceeded estimates for a 0.1 percent uptick.

The Labor Department also released a separate report showing that initial jobless claims jumped to their highest level in four months in the week ended January 10th.

Meanwhile, the New York and Philadelphia Federal Reserves released a pair of reports painting a mixed picture of activity in the manufacturing sector.

Another batch of U.S. economic data is scheduled to be released on Friday, with traders likely to keep an eye on reports on consumer prices, industrial production, and consumer sentiment.