Treasuries Move Back To The Downside After ECB Announcement

(RTTNews) - After moving higher over the course of the previous session, treasuries moved back to the downside during trading on Thursday.

Bond prices came under pressure early in the session and remained stuck in the red as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4 basis points to 2.387 percent.

The pullback by treasuries came on the heels of the European Central Bank's highly anticipated monetary policy announcement.

While the ECB said its asset purchase program is being extended longer than anticipated, the bank also said it will slow the pace of purchases.

The ECB said it decided to continue its asset purchases at the current monthly pace of 80 billion euros until the end of March of 2017.

From April of 2017, the asset purchases are intended to continue at a monthly pace of 60 billion euros until the end of December 2017, or beyond, if necessary

In his subsequent press conference, ECB President Mario Draghi argued the reduction does not qualify as "tapering" and said the option of scaling back bond purchases to zero was not discussed by policymakers

Draghi stressed that the asset purchases could be expanded or extended if the economic outlook worsens in the future.

"Presumably, the Bank has been encouraged by signs that the economy is performing well in the face of political uncertainty at home and abroad," said Jennifer McKeown, Chief European Economist at Capital Economics. "However, it clearly remains in cautious mode."

On the U.S. economic front, the Labor Department released a report showing that initial jobless claims pulled back in the week ended December 3rd after reaching a five-month high in the previous week.

The report said initial jobless claims fell to 258,000, a decrease of 10,000 from the previous week's unrevised level of 268,000. The drop in jobless claims matched economist estimates.

Meanwhile, the Treasury Department announced the details of next week's auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury said it plans to auction $24 billion worth of three-year notes and $20 billion worth of ten-year notes next Monday and $12 billion worth of thirty-year bonds next Tuesday.

The auctions come earlier in the week than usual due to the Federal Reserve's monetary policy announcement next Wednesday.

While reports on consumer sentiment and wholesale inventories are due to be released on Friday, traders may be reluctant to make significant moves ahead of next week's Fed meeting.