MW: Treasurys under pressure before 7-year note auction
Longer-dated Treasury prices remained under pressure Thursday, pushing yields higher, as investors prepared to bid on a record amount of 7-year notes, the last of three government auctions this week.
Ten-year note yields ) rose 1 basis point, or 0.01%, to 2.79%. Yields move in the opposite direction of prices.
Two-year note yields ) slid 2 basis points lower to stand at 0.94%, helped after a government report showed persistent weakness in the job market.
Initial claims for unemployment benefits rose to 652,000 in the latest week, the Labor Department said. Continuing claims rose to a new record high, indicating finding a new job is increasingly difficult. See more on jobless claims.
A separate report showed the U.S. economy shrank at 6.3% annualized pace in the fourth quarter, better than economists expected. It was the government's final update on gross domestic product for the period. See more on GDP.
Money flowed into U.S. equities at the open, with stocks getting off on a higher note.
The data "sapped further demand for safe-haven Treasurys as optimism grows that U.S. government efforts to revive the economy will work," said Roseanne Briggen, Treasury market analyst at Informa.
The Treasury Department will sell $24 billion in seven-year notes, with bids due at 1 p.m. Eastern time.
The yield on the current 7-year note was little changed at 2.35%.
Traders frequently sell existing holdings in order to bid on debt about to be put up for bid.
It's only the second auction of the maturity in more than a decade, part of the government's plan to spread out its increasing debt issuance needed to finance the various economic-stimulus spending and tax cuts as well as Federal Reserve programs to grease the wheels of credit markets.
Analysts will be closely watching for the results of the auction, to gauge demand for both the new security as well as U.S. debt in general. On Tuesday, the government received strong interest for $40 billion in 2-year notes, though Wednesday's $34 billion in 5-year notes ) garnered a lackluster reception.
