Treasuries Move Notably Lower Following ECB Announcement

(RTTNews) - With traders reacting to the latest monetary policy decision out of Europe, treasuries showed a notable move to the downside during trading on Thursday.

Bond prices moved steadily lower throughout much of the session before closing firmly in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 7.5 basis points to 1.616 percent.

The pullback by treasuries came following the European Central Bank's announcement of its decision to leave interest rates unchanged.

The decision to leave rates unchanged was widely expected, although some analysts had been expecting the ECB to announce an extension of its quantitative easing program.

The ECB reiterated that its monthly asset purchases of 80 billion euros are intended to run until the end of March 2017, or beyond, if necessary.

In his subsequent press conference, ECB President Mario Draghi said the program will continue until the path of inflation is consistent with the bank's goal but said no extension was discussed at the meeting.

Carsten Brzeski, Chief Economist at ING-DiBa, said the ECB seems to be in no hurry to go wild and decide on new bold measures.

"Persistently stubborn low core inflation rates and the fact that significant fiscal stimulus will probably only come after the Dutch, French and German elections, suggests that the ECB will eventually be forced to extend QE, at least until the end of 2017," Brzeski said. "The next ECB meetings should be more exciting than today's."

On the U.S. economic front, the Labor Department released a report this morning showing that initial jobless claims unexpectedly edged lower in the week ended September 3rd.

The report said initial jobless claims dipped to 259,000, a decrease of 4,000 from the previous week's unrevised level of 263,000. Economists had expected jobless claims to inch up to 264,000.

Additionally, 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.

Amid a lack of major U.S. economic data on Friday, traders are likely to keep an eye on remarks by Federal Reserve officials for any clues about the outlook for interest rates.