Bonds like ‘a superball’ near record-low yields, analysts say
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices slipped on Thursday, keeping benchmark 10-year yields around 1.50%, after a report showed U.S. initial jobless claims jumped more than expected in the latest week.
Yields on 10-year notes 10_YEAR +1.00% , which move inversely to prices, rose 2 basis point to 1.52%.
A basis point is one one-hundredth of a percentage point.
Five-year-note yields 5_YEAR -0.16% were little changed at 0.61%, after setting new lows on Monday.
Yields on 30-year bonds 30_YEAR +0.81% added 2 basis points to 2.62%. They closed at their lowest level since June 1, but remain a little above their record low of 2.505% set in December 2008.
The Labor Department said 386,000 Americans sought first-time claims for unemployment benefits last week. Read story on jobless claims.
“The volatility in initial jobless claims over the last two weeks is due to seasonal adjustment difficulties related to summer factory retooling shutdowns, which have not followed the usual pattern this year,” said economists at RDQ Economics. “This report does not suggest that there was a significant change in the pace of job losses between the two months.”
Coming up is the Philadelphia Federal Reserve index and data on existing home sales.
Also, the Treasury Department will auction $15 billion in 10-year inflation-indexed debt at negative yields. See recent Treasury auction results.
Treasury yields touched record lows earlier this week, but haven risen modestly as Federal Reserve Chairman Ben Bernanke’s testimony left many traders convinced the central bank will easy policy further, even though Bernanke gave no direct indications of when or what form. Read more on Treasurys, Bernanke.
“The market continues to act like a superball bouncing inside a really tiny squash court – like really tiny,” bond strategists at CRT Capital Group wrote in a note. Superballs would “bounce a lot, more or less in random ways, and ultimately settle down into a random, but less exciting bouncy range finally stopping altogether. Isn’t this a bit like the bond market?”
Deborah Levine is a MarketWatch reporter, based in New York.
