Treasuries Give Back Ground Following Recent Strength

(RTTNews) - Treasuries moved to the downside during trading on Thursday, giving back some ground growth after rising sharply in recent sessions.

Bond prices came under pressure over the course of morning trading before moving roughly sideways in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.5 basis points to 2.019 percent.

With the increase on the day, the ten-year yield climbed off the three-month closing low set in the previous session.

The pullback by treasuries was partly due to profit taking, as traders cashed in on the strong upward move seen in the new year.

A notable increase by the price of crude oil also weighed on treasuries, with crude for March delivery climbing $1.18 to $29.53 a barrel.

The increase by the price of crude oil came following the release of a report from the Energy Information Administration showing an unexpected decrease in distillate fuel inventories.

Traders were also reacting to the latest monetary policy announcement from the European Central Bank, which left interest rates unchanged.

In his subsequent press conference, ECB President Mario Draghi noted downside risks have increased and said the bank would review and possibly reconsider its monetary policy stance at the next meeting in early March.

On the U.S. economic front, the Labor Department released a report this morning showing an unexpected increase in initial jobless claims in the week ended January 16th.

The report said initial jobless claims climbed to 293,000, an increase of 10,000 from the previous week's revised level of 283,000.

The increase came as a surprise to economists, who had expected jobless claims to drop to 275,000 from the 284,000 originally reported for the previous week.

With the unexpected increase, jobless claims rose to their highest level since reaching 296,000 in the week ended July 4th.

A separate report from the Federal Reserve Bank of Philadelphia showed that manufacturing conditions in the Philadelphia region contracted modestly in January.

The Philly Fed said its diffusion index for current activity increased to a negative 3.5 in January from a negative 10.2 in December, although a negative reading indicates a contraction in regional manufacturing activity.

Trading on Friday may be impacted by reaction to U.S. reports on existing home sales and leading economic indicators.