Treasuries Extend Drop Following Upbeat Housing, Manufacturing Data

(RTTNews) - After ending the previous session moderately lower, treasuries saw some further downside over the course of the trading day on Thursday.

Bond prices moved steadily lower throughout much of the session before climbing off their lows going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged up by 1.8 basis points to 2.555 percent.

The continued weakness among treasuries came as the U.S. economic calendar finally picked up following several quiet days.

Some selling pressure was generated by the release of a report from the National Association of Realtors showing that existing home sales rose for the first time this year in April.

NAR said existing home sales rose 1.3 percent to a seasonally adjusted annual rate of 4.65 million in April from 4.59 million in March.

Additionally, financial data firm Markit released a report showing that its preliminary reading on manufacturing activity in May rose by more than expected.

The report showed that Markit's Manufacturing Purchasing Managers Index rose to 56.2 in May from 55.4 in April, with a reading above 50 indicating growth in the sector. Economists had expected the index to inch up to 55.9.

On the other hand, a report from the Labor Department showing that initial jobless claims rebounded by more than expected in the week ended May 17th helped to limit the downside for treasuries.

The Labor Department said jobless claims jumped to 326,000, an increase of 28,000 from the previous week's revised level of 298,000. Economists had been expecting jobless claims to climb to 310,000.

While the number for the previous week was upwardly revised from 297,000, it still represents the lowest number of claims in seven years.

Peter Boockvar, chief market analyst at the Lindsey Group, said, "Last week's below 300,000 print turned out to be a one week wonder but the recent trend is encouraging in terms of the pace of firing's."

In other bond-related news, the Treasury Department revealed that it plans to auction $31 billion worth of two-year notes next Tuesday, $35 billion worth of five-year notes next Wednesday and $29 billion worth of seven-year notes next Thursday.

Trading on Friday may be impacted by the release of the Commerce Department's report on new home sales, although activity is likely to be somewhat subdued ahead of the long weekend.