Treasuries Extend Pullback Following ECB Stimulus Announcement

(RTTNews) - Following the pullback seen in the previous session, treasuries saw some further downside on Thursday following the European Central Bank's monetary policy announcement.

Bonds prices regained some ground late in the session but still closed in negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.7 basis points to 1.929 percent.

With the continued increase on the day, the ten-year yield ended the session at its highest closing level in well over a month.

The weakness among treasuries came in reaction to the ECB's announcement of a package of stimulus measures designed to boost the struggling European economy.

The ECB reduced its various interest rates by 5 or 10 basis points and expanded its monthly asset purchase program by 20 billion euros.

In his subsequent press conference, ECB President Mario Draghi said rates are likely to remain at low levels for an extended period of time but said he does not anticipate the need for further rate cuts.

Draghi said the risks to growth remain tilted to the downside, citing heightened uncertainties regarding developments in the global economy as well as broader geopolitical risks.

However, treasuries climbed off their lows following the release of the results of the Treasury Department's auction of $12 billion worth of thirty-year bonds, which attracted average demand.

The thirty-year bond auction drew a high yield of 2.720 percent and a bid-to-cover ratio of 2.33, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.34.

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 Labor Department released a report showing a much bigger than expected pullback in initial jobless claims in the week ended March 5th.

The Labor Department said initial jobless claims dropped to 259,000, a decrease of 18,000 from the previous week's revised level of 277,000. Economists had expected jobless claims to edge down to 272,000.

With the bigger than expected decrease, jobless claims fell to their lowest level since hitting a matching number in the week ended October 17th.

The U.S. economic calendar remains relatively quiet on Thursday, although the Labor Department is scheduled to release its report on import and export prices.