By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices rose modestly on Thursday, pushing yields down, after a report showed 404,000 Americans filed first-time claims for jobless benefits in the latest week.
Yields on benchmark 10-year notes, which move inversely to prices, have risen consistently since hitting a record low earlier this month, which analysts said may lure investors back in after the government’s last auction of the week, of 30-year bonds, later in the session.
Yields on 10-year notes 10_YEAR -2.98% fell 3 basis points to 2.18%. A basis point is 1/100th of a percentage point.
Yields on 30-year bonds 30_YEAR -2.06% slipped 2 basis points to 3.18%.
Two-year note yields 2_YEAR -5.54% were little changed at 0.29%.
”Ten-year yields are still 50 basis points above the recent lows, said Richard Gilhooly, U.S. director of interest-rate strategy at TD Securities.
”Even a rally back to test the 2.00% area, which is possible after the bond auction today and a possible more rocky few weeks ahead for Europe, would still leave the lows in yield comfortably intact at the 1.70% area in 10-year yields,” he said.
The weekly jobless claims data came in near analysts’ expectations. The four-week moving average of claims, seen as a more accurate gauge of labor trends because it smooths out volatility, fell to the lowest level since mid-August. Read more on jobless claims
“While we tend to view this level as ‘okay’ given that recent levels have been more than 420,000 to 430,000 or so, two years on from the end of a recession, initial jobless claims should consistently have a “3” handle,” meaning under 400,000, said economists at BTIG.
A separate report showed the U.S. trade deficit in August was $45.6 billion, little changed from a revised gap for July.
The Treasury Department will auction $13 billion in 30-year bonds, taking bids until 1 p.m. Eastern time.
Yields on the securities are lower than the 3.31% level at last month’s sale, but up from the 2.70%-area seen at the beginning of the month. Those were the lowest levels for 30-year yields since the beginning of 2009, when the record low was set.
The auction is a reopening, which means the bonds sold will carry the same maturity and coupon as the original issue. Also, the amount sold is usually smaller than the initial amount.
At the last four bond reopenings, bidders offered to buy an average of 2.78 times the amount of debt sold.
Indirect bidders, a group that includes foreign central banks, bought 40.7% of recent sales on average.
Direct bidders, which includes domestic money managers, purchased another 14.8% on average.
The bulk of remaining debt sold goes to primary dealers, firms required to bid at auctions, who tend to turn around and re-sell their newly-bought securities.
Analysts look at these statistics as a snapshot of demand for U.S. demand, especially from international investors and buyers more likely to hold onto the securities.
Wednesday’s 10-year note auction was considered very weak. On top of optimism that Europe will devise a plan to address its sovereign-debt issues, yields rose to the highest in more than a month. Read about 10-year Treasury auction, bond yields.
