After initially showing a lack of direction, treasuries moved moderately higher over the course of the trading day on Thursday.
Bond prices moved to the upside as the day progressed, closing in positive territory for the first time in four days. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.5 basis points to 1.947 percent.
With the drop, the ten-year yield gave back ground after closing higher for three straight sessions, but it remained well off last Friday’s two-month closing low.
The strength that emerged among treasuries may partly have reflected bargain hunting following the pullback seen over the past few days.
Traders may also have been expressing optimism that the Federal Reserve will delay its planned increase in interest rates following the release of disappointing housing data.
The Commerce Department released a report showing that new home sales plunged 11.4 percent to an annual rate of 481,000 in March after jumping 5.6 percent to a revised rate of 543,000 in February. Economists had expected new home sales to drop to an annual rate of 518,000.
With the bigger than expected decrease, the annual rate of new home sales gave back ground after reaching a seven-year high in February.
Rob Carnell, chief international economist at ING, said, “There is some possibility of weather being at play in these numbers, with abnormally cold weather in the North East in March, and abnormally wet weather in the South, the two regions seeing the biggest declines in sales.”
“So for now, the jury remains out in terms of any data bounce,” he added. “But the coming dataflow over the coming days is unlikely to rescue June rate hike thoughts, being dominated by what looks likely to be a terrible 1Q15 GDP figure.”
A separate report from the Labor Department showed an unexpected uptick in initial jobless claims in the week ended April 18th, although claims remained below 300,000.
Meanwhile, the Treasury Department announced the details of next week’s auctions of two-year, five-year, and seven-year notes.
The Treasury said it plans to auction $26 billion worth of two-year notes next Monday, $35 billion worth of five-year notes next Tuesday, and $29 billion worth of seven-year notes next Wednesday.
Economic data may remain in focus on Friday, as the Commerce Department is scheduled to release its monthly report on durable goods orders.
The material has been provided by InstaForex Company – www.instaforex.com