MW: Treasurys fall slightly after data, Fed TIPS purchases
Treasurys fell slightly on Thursday, sending yields higher, after a series of economic reports fueled continued hopes that the pace of economic decline is decelerating, while the market braced for more borrowing needs from the government.
"Government supply remains relatively light next week," said Action Economics in a note. But the market expects it to "pick up into month-end, however."
Separately, the Federal Reserve Bank of New York bought $1.5 billion in Treasurys, part of a program to improve conditions in private credit markets and spur lending. The debt bought included Treasury Inflation Protected Securities maturing between 2010 and 2032.
Dealers submitted $15.6 billion in debt to be purchased. The operation was the third for the Fed this week, heading towards purchasing $300 billion in Treasury securities over the next six months.
Yields on benchmark 10-year Treasurys were up 4 basis points at 2.809%. Yields on 2-year notes were up 4 basis points at 0.871%, while those on 30-year bonds gained 4 basis points to 3.700%.
Treasurys tend to gain when the outlook for the economy darkens, which prompts investors to seek the safety of government debt. Yields rise when prices fall.
First-time claims for state unemployment benefits fell to their lowest level since the end of January in the latest week, even as continuing jobless claims remained at a record high. See full story.
The Philly Fed index increased to negative 24.4 from negative 35 in March. Readings below zero indicate most firms surveyed said business was still getting worse. Expectations improved, suggesting that "the region's manufacturing executives expect declines to bottom out over the next six months," the bank said.
Separately, housing starts fell to 10.8% in March to a seasonally adjusted annual rate of 510,000 from 572,000 in February. It's the second-lowest rate since the 1940s. January's 488,000 pace remains the post-war low. It was much weaker than the 550,000 annual rate expected by economists surveyed by MarketWatch. See full story.
Government bonds opened under pressure after JP Morgan Chase posted upbeat earnings, boosting hopes for the recovery of banks and the financial system.
