By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices came off their Thursday lows after a government report showed durable-goods orders unexpectedly fell, denting some hopes that the U.S. economy can grow at a sustainable pace amid problems in Japan, the Middle East and Europe.
Yields on 10-year notes (UST10Y 3.37, +0.03, +0.90%) , which move inversely to prices, rose 1 basis point to 3.37%, after touching to 3.40% earlier. A basis point is 1/100th of a percent.
Yields on 2-year notes (UST2YR 0.67, +0.02, +2.45%) , erasing an earlier rise to 0.71%, fell one basis point to 0.66%.
Analysts also noted that technical momentum has turned against Treasurys.
Orders for U.S. durable goods posted the biggest drop in fourth months, falling 0.9% in February, the Commerce Department said. Read about durable-goods orders.
“Today’s report is certainly not good for first-quarter GDP,” said Dan Greenhaus, chief economic strategist at Miller Tabak. The government’s latest revised estimate of gross domestic product for the fourth quarter of 2010 is due out Friday.
Separately, the Labor Department said first-time jobless claims fell slightly to 382,000 in the latest week, near analysts’ expectations. See story on jobless claims.
While some U.S. economic data have come in a little soft lately, the market has paid little attention, captivated instead by the ebb and flow of chaos around the world — including radiation fears and supply disruptions in Japan as well as fighting in Libya and rising oil prices.
Lately, worries have resumed about sovereign debt in Europe as another country — Portugal — appears on the brink of needing a bailout.
Also weighing on bonds, analysts note a renewed flood of corporate bond sales, which tend to trigger hedging in the government market.
“Rates have pushed higher as corporate issuance has jumped to take advantage of lower yields over recent weeks and now stability and a reduction in fear,” said Richard Gilhooly, director of rates strategy at TD Securities.
Additionally, traders are back to setting up for U.S. debt sales.
Later in the session, the government will announce how much debt it will sell next week as well as its auction of inflation-linked debt.
Also on deck is another Federal Reserve buyback. These tend to not have a big impact on the market on a day-to-day basis, except for cases such as Wednesday when a lot of interest in selling to the Fed weighed on the market after the buyback. Read about Wednesday’s Fed buyback.
