Treasuries Show Notable Move Back To The Downside

(RTTNews) - Treasuries showed a notable move to the downside during trading on Thursday, giving back ground after moving sharply higher over the course of the previous session.

Bond prices staged a brief recovery attempt after seeing early weakness but pulled back more firmly into the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.1 basis points to 3.850 percent.

The pullback by treasuries came as some traders looked to cash in on the recent strength in the bond market, which drove the ten-year yield down to its lowest levels in five months of Wednesday.

Traders seemed to shrug off a Labor Department report showing first-time claims for U.S. unemployment benefits rose by more than expected in the week ended December 23rd.

The report said initial jobless claims climbed to 218,000, an increase of 12,000 from the previous week's revised level of 206,000.

Economists had expected jobless claims to inch up to 210,000 from the 205,000 originally reported for the previous week.

The National Association of Realtors also released a report showing pending home sales were unexpectedly unchanged in the month of November.

NAR said its pending home sales index stayed at 71.6 in November after tumbling by a revised 1.2 percent in October.

Economists had expected pending home sales to jump by 1.0 percent compared to the 1.5 percent slump originally reported for the previous month.

Meanwhile, the Treasury Department revealed this month's auction of $40 billion worth of seven-year notes attracted average demand.

The seven-year note auction drew a high yield of 3.859 percent and a bid-to-cover ratio of 2.50, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.

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

Earlier in the week, the Treasury revealed this month's auctions of $57 billion worth of two-year notes and $58 billion worth of five-year notes also attracted roughly average demand.

Trading on Friday is likely to remain subdued ahead of the New Year's weekend, although a report on Chicago-area business activity may attract some attention.