Treasuries Extend Recent Pullback With Modestly Lower Close

(RTTNews) - Treasuries moved modestly lower over the course of the trading day on Thursday, pulling back further off the highs set earlier this week.

Bond prices saw some fluctuations as the day progressed but maintained a negative bias throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 1.9 basis points to 2.607 percent.

The continued weakness among treasuries was partly due to the release of a report from the Commerce Department showing a much bigger than expected increase in durable goods orders in June.

The Commerce Department said durable goods orders surged up by 4.2 percent in June following an upwardly revised 5.2 percent jump in May. Economists had expected orders to rise by 1.5 percent.

While the increase in orders was largely due to a jump in orders for transportation equipment, the report also showed a 0.7 percent increase in orders for non-defense capital goods excluding aircraft, which are seen as an indicator of future business spending.

Noting that the three-month-on-three-month annualized growth rate dipped only slightly, Paul Ashworth, Chief U.S. Economist at Capital Economics, said the data suggests business investment will rebound in the third quarter.

Meanwhile, a separate report from the Labor Department showed that initial jobless claims came in slightly above economist estimates in the week ended July 20th.

The report said initial jobless claims rose to 343,000, an increase of 7,000 from the previous week's revised figure of 336,000. Economists had been expecting jobless claims to climb to 341,000 from the 334,000 originally reported for the previous week.

Treasuries remained 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 2.026 percent and a bid-to-cover ratio of 2.54, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.65.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

The economic calendar for Friday is relatively quiet, although Thomson Reuters and the University of Michigan are scheduled to release their revised report on July consumer sentiment.