By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Long-term Treasury prices turned back down slightly Thursday, keeping yields in a very tight range, as signals from other markets were mixed.
Bonds initially gained on a pair of U.S. economic reports came in weaker than expected, which continue to weigh on stocks. But comments from European Central Bank President Mario Draghi about its bank lending operations boosted the euro.
The government’s last debt auction of the week, a sale of 30-year bonds, is on tap.
Yields on 10-year notes 10_YEAR +0.42% , which move inversely to prices, rose 1 basis point to 1.92%, after falling to 1.89% after the data. A basis point is one one-hundredth of a percentage point.
Thirty-year bond yields 30_YEAR +0.24% were little changed at 2.97%.
Yields on 2-year notes 2_YEAR 0.00% fell 2 basis points to 0.23%.
Bonds turned up slightly after the Commerce Department said U.S. retail sales rose a less-than-forecast 0.1% in December. See story on retail sales.
“It was not a happy holiday season for U.S. retailers,” said Paul Dales, senior U.S. economist at Capital Economics. “Households have started to pare back their spending, most probably because their real incomes have continued to fall.”
Separately, a Labor Department report showed first-time claims for unemployment benefits rose to 399,000 in the latest week, a higher level than predicted. Read more on jobless claims.
While data at the beginning of the year is notoriously volatile, “the sharp increase in claims following the end of the holiday season suggests that temporary employment was the driver behind the recent improvement in labor market conditions,” said Steven Ricchiuto, chief economist at Mizuho Securities.
U.S. stocks slipped, with the Standard & Poor’s 500 Index SPX -0.22% losing 0.3%.
Bonds were under slight pressure before the data following very well-received bond auctions by Spain and Italy, easing worries about European countries’ ability to refinance debt. See story on Italian, Spain bond auction.
Also, the euro EURUSD +0.86% was supported by Draghi‘s confidence that the ECB’s first long-term refinancing operation helped to improve the funding situation of banks, and that the central bank is working on making changes to collateral rules for the next LTRO. Read about euro, ECB’s Draghi.
Long-bond auction
The Treasury Department will sell 30-year bonds, with bids due at 1 p.m. Eastern time. See recent Treasury bond auctions.
