Treasuries Move Modestly Lower Following Upbeat Economic Data

(RTTNews) - After ending yesterday's choppy session roughly flat, treasuries showed a modest move to the downside during trading on Thursday.

Bond prices climbed off their worst levels after coming under pressure in early trading but remained in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose 2.6 basis points to 3.867 percent.

The modest weakness among treasuries came following the release of some upbeat U.S. economic data, including a Commerce Department report showing the U.S. economy unexpectedly grew by more than previously estimated in the second quarter.

The Commerce Department said the surge by gross domestic product in the second quarter was upwardly revised to 3.0 percent from the previously reported 2.8 percent. Economists had expected the pace of GDP growth to be unrevised.

With the upward revision, the pace of GDP growth in the second quarter showed an even faster acceleration compared to the 1.4 percent jump in the first quarter.

The report also showed modest downward revisions to the pace of consumer price growth during the second quarter.

"Downward revisions to inflation accompanying an upward revision to spending builds the case for a soft landing," said Jeffrey Roach, Chief Economist for LPL Financial. "The key for the rest of this year will be the job market."

He added, "Leading indicators for employment indicate services employment is starting to cool but the savings from lower mortgage debt servicing will continue to support household balance sheets."

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits edged slightly lower in the week ended August 24th.

The report said initial jobless claims slipped to 231,000, a decrease of 2,000 from the previous week's revised level of 233,000.

Economists had expected jobless claims to come in unchanged compared to the 232,000 originally reported for the previous week.

Treasuries also moved to the downside ahead of the release of closely watched inflation data on Friday, which could impact expectations regarding how quickly the Federal Reserve lowers interest rates.