U.S. initial jobless claims remain nearly unchanged at 388,000
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices extended gains slightly on Thursday, pushing yields down, after a report showed U.S. initial jobless claims were little changed in the latest week at 388,000.
Yields on 10-year notes 10_YEAR -1.91% , which move inversely to prices, fell 4 basis points to 1.95%. A basis point is one one-hundredth of a percentage point.
Thirty-year notes 30_YEAR -1.18% decreased 5 basis points to 3.10%.
Yields on 5-year notes 5_YEAR -6.72% fell 6 basis points to 0.83%.
The Labor Department said the number of Americans who filed first-time requests for jobless benefits stayed near their highest level of the year. See more on jobless claims.
“A higher than expected figure and the highest since January is giving the market a bit of a goose following up on earlier, subdued, strength,” said David Ader, head of government bond strategy at CRT Capital Group. Supporting bonds before the U.S. report was weak confidence data out of Europe.
“This is a tense time for Treasurys as weakening growth and financial conditions in Europe meet overbought Treasury prices and investors who see no meat on the bone in safe-haven assets,” said bond strategists at RBS Securities.
On Wednesday, Treasurys got pushed around by the Federal Reserve Open Market Committee’s post-meeting policy statement, updated forecasts and Chairman Ben Bernanke’s press conference.
The forecasts were interpreted as more positive on the economy and therefore hawkish on the interest-rate outlook. But that was reversed when Bernanke said the U.S. central bank is prepared to take more action if it’s deemed appropriate. Read about bonds, Fed.
That’s likely to weigh on demand at the Treasury Department’s sale of $29 billion in 7-year notes 7_YEAR -2.56% , said George Goncalves, head of U.S. rates strategy at Nomura Securities. The auction closes at 1 p.m. Eastern time, and is the last auction of the week.
Intermediate and longer-dated debt has been the biggest beneficiary of the Fed’s current bond-buying program, known as Operation Twist. Since the Fed gave no hints of continuing that program past its expected end in June, that could reduce traders’ interest in the auction, analysts said.
“The FOMC was more hawkish than the market expected, and the press conference started the unwind process for Twist,” Goncalves wrote ina note. “We expect this momentum to continue slowly, as the market looks to price in life without continuous Fed purchases, and therefore look for weak demand for 7-year notes.”
Deborah Levine is a MarketWatch reporter, based in New York.
