Treasuries Close Sharply Higher Following Recent Sell-Off

(RTTNews) - Following the sell-off seen over the past several sessions, treasuries showed a strong move back to the upside during trading on Thursday.

Bond prices moved steadily higher throughout much of the session before closing firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 9.5 basis points to 2.383 percent.

With the steep drop on the day, the ten-year yield pulled back off the eight-month closing high set in the previous session.

Treasuries initially moved higher in reaction to a slew of U.S. economic data, including the Commerce Department's closely watched retail sales report.

The Commerce Department said retail sales jumped by 1.2 percent in May following an upwardly revised 0.2 percent increase in April. The increase matched economist estimates.

Excluding an increase in auto sales, retail sales still climbed by 1.0 percent in May compared to a 0.1 percent uptick in the previous month. Ex-auto sales had been expected to rise by 0.8 percent.

Meanwhile, the Labor Department released a separate report showing a modest increase in initial jobless claims in the week ended June 6th.

Further buying interest was generated in reaction to news that the International Monetary Fund has halted bailout talks with Greece.

"The ball is very much in Greece's court," IMF spokesman Gerry Rice told reporters. "There are major differences between us in most key areas. There has been no progress in narrowing these differences."

The remarks offset recent optimism generated by reports suggesting that Greece was close to an agreement to avoid a default.

Treasuries saw some further upside following the release of the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 3.138 percent and a bid-to-cover ratio of 2.54, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio 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.

Trading on Friday may be impacted by another batch of U.S. economic data, with traders likely to keep an eye on reports on producer price inflation and consumer sentiment.