MW: Treasurys gain on jobless data; TIPs sale on tap
By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) -- Treasurys took baby steps upward Thursday morning following the release of weekly initial jobless claims that provided little change in the labor market’s narrative of softness.
Treasury prices had been down on the day after yields hit lows for the year Wednesday, but changed direction after the jobless claims release. The yield on the 10-year benchmark note 10_YEAR -0.71% fell1 basis point on the day to 1.691%. The 30-year 30_YEAR -0.35% bond is just about level at 2.877% while the 5-year note 5_YEAR -0.72% slid 1 basis point to 0.687%.
The number of new jobless claims last week climbed 4,000 data to 352,000, the Labor Department Thursday. Though the number is slightly higher, it is also more stable after the wild swings of the past few weeks. In the last week of March, jobless claims rose to 388,000 from 357,000 before dropping to 348,000.
The four week average, which smooths out the data’s fluctuations, climbed 2,750 in Thursday’s data to 361,250.
“Overall, the claims data continues to fare moderately well, with fading seasonal effects and no peculiarities in this week’s data continuing to suggest that claims should remain in the 335K-355K range for the time being,” said Gennadiy Goldberg, U.S. strategist at TD Securities, in a note.
At 1 p.m. Thursday, the Department of Treasury will complete its largest ever auction of 5-year Treasury Inflation-Protected Securities (TIPS) with a $18 billion offering.
Those securities, which hedge against inflation by adjusting the principal of the note alongside inflation, have been underperforming as inflation has failed to materialize. But the selloff makes the auction a buyer’s market.
“Given the attractiveness of the sector here, we anticipate seeing interest from real money accounts that would buy 5yr paper here instead of extending out the curve,” said analysts from RBS, led by Gabriel Mann, in a note.
This week’s volatile equity market is likely to continue to impact the Treasury market. The Dow Jones Industrial Average DJIA -0.31% was down 65 points in trading Thursday morning while the S&P 500 SPX -0.40% was down 9 points.
“Treasuries have been buffeted by swings in other markets and the on and off terrorism related safe-haven demand this week. We expect the market will continue to be driven by outside factors today,” said analysts from Stone & McCarthy Research Associates, in a note.
Ben Eisen is a MarketWatch reporter based in New York.
