Treasuries moved notably lower during trading on Thursday, extending the downward move seen over the course of the previous session.
Bond prices came under pressure in early trading and saw further downside as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 8.1 basis points to 2.173 percent.
With the increase on the day, the ten-year yield added to the 6.4 basis point gain posted on Wednesday to reach its highest closing level in over a month.
The sustained drop by treasuries came as traders continued to digest yesterday’s monetary policy announcement from the Federal Reserve, which suggested a December interest rate hike remains on the table.
Many analysts pointed to the fact that the Fed statement removed a reference to global economic and financial developments potentially restraining economic activity.
The Fed’s explicit indication that it will assess progress towards its objectives in determining whether it will be appropriate to raise rate at its “next meeting” was also highlighted.
Treasuries remained stuck in the red following the release of the results of the Treasury Department’s auction of $29 billion worth of seven-year notes.
The seven-year note auction drew a high yield of 1.885 percent and a bid-to-cover ratio of 2.55, while the ten previous seven-year auctions had an average bid-to-cover ratio of 2.44.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
On the U.S. economic front, the Commerce Department released a report showing a notable slowdown in the pace of U.S. economic growth in the third quarter.
The report said real gross domestic product rose by 1.5 percent in the third quarter compared to the 3.9 percent jump seen in the second quarter. Economists had expected a 1.7 percent increase.
The Commerce Department said the slower growth reflected a downturn in private inventory investment as well as decelerations in exports, non-residential fixed investment, and consumer spending.
Meanwhile, the National Association of Realtors recently released a separate report showing that pending home sales unexpectedly fell for the second straight month in September.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Trading on Friday may be impacted by reaction to the latest batch of economic data, including reports on personal income and spending, consumer sentiment and Chicago-area business activity.
The material has been provided by InstaForex Company – www.instaforex.com