MW: Treasurys gain on weak jobless claims, housing data
Treasury prices traded higher Thursday, playing off a pair of government reports that showed the U.S. labor market and housing sector continued to weaken.
The data threw cold water on any hopes that the worst of the recession has past.
Two-year note yields ) declined 4 basis points to 0.73%. A basis point is 0.01%.
Yields on 10-year notes , which move inversely to bond prices, fell 1 basis point to 2.53%.
Bond prices move inversely to their yields.
The Labor Department said initial claims for unemployment benefits rose by 62,000 to stand at 589,000 in the week ended Jan. 17. Continuing claims for jobless benefits rose to 4.61 million, indicating finding a new job is getting harder. See jobless claims story.
A separate report showed housing starts fell more than 15% in December to a seasonally adjusted 550,000 pace, the lowest on record and 50,000 weaker than economists surveyed by MarketWatch had expected. Building permits also remained in the doldrums. See housing story.
The latest data "are showing no signs of bottoming for domestic consumers," said strategists at RBS Greenwich Capital.
Accordingly, investors are bidding Treasurys higher, they said.
No respite appears in the cards for job losses.
Several companies, including Microsoft Corp.on Thursday and United Airlines' parent UAL Corp. ) earlier this week, announced thousands of job cuts to come. And last week, electronics retailer Circuit City announced plans to liquidate its stores that will affect more than 30,000 employees. See Microsoft story.
The rise in jobless claims "does not fully reflect recent layoff announcements, and so we can expect claims to remain elevated in coming months," said T.J. Marta, fixed-income strategist at RBC Capital Markets.
U.S. debt also benefited as domestic stocks declined and China said fourth-quarter economic growth slowed to the weakest rate in seven years. See China story.
At 11 a.m. Eastern, the Treasury Department will announce how much in notes it plans to auction next week.
Wrightston ICAP expects the government to issue $10 billion in 20-year inflation-protected securities on Monday, followed by $40 billion in two-year notes the next day and $30 billion in five-year notes on Thursday.
