Treasuries Give Back Ground Following Upbeat Economic Data

Treasuries moved to the downside during trading on Thursday, giving back ground after trending higher over the past few sessions.

Bond prices moved steadily lower as the day progressed before closing firmly in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.3 basis points to 1.057 percent.

The pullback by treasuries was partly due to a rebound by stocks on Wall Street, which moved sharply higher following the sell-off seen on Wednesday.

A batch of upbeat U.S. economic data also reduced the appeal of safe havens like bonds, with a report from the Labor Department showing a bigger than expected decline in first-time claims for U.S. unemployment benefits in the week ended January 23rd.

The Labor Department said initial jobless claims fell to 847,000, a decrease of 67,000 from the previous week’s revised level of 914,000.

Economists had expected jobless claims to drop to 875,000 from the 900,000 originally reported for the previous week.

Jobless claims declined for the second consecutive week after reaching a more than four-month high of 927,000 in the week ended January 9th.

The Commerce Department also released a report showing economic growth matched economist estimates in the fourth quarter of 2020.

The report said real gross domestic product jumped by 4.0 percent in the fourth quarter after skyrocketing by 33.4 percent in the third quarter.

Despite the rebound in the second half of the year, GDP for 2020 contracted by 3.5 percent following the 2.2 percent growth seen in 2019.

A separate report from the Commerce Department showed new home sales in the U.S. rebounded in the month of December after falling for four consecutive months.

Bond prices hit their lows of the session after the Treasury Department revealed this month’s auction of $62 billion worth of seven-year notes attracted below average demand.

The seven-year note auction drew a high yield of 0.754 percent and a bid-to-cover ratio of 2.30, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.46.

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 reaction to another batch of U.S. economic data, including reports on personal income and spending, consumer sentiment and pending home sales.

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