Treasuries Move Modestly Higher Following Recent Weakness

After moving notably lower over the past few sessions, treasuries regained some ground during the trading day on Thursday.

Bond prices initially showed a lack of direction but moved modestly higher as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.6 basis points to 2.481 percent.

With the slight decrease on the day, the ten-year yield pulled back after ending the previous session at its highest closing level in nine months.

Bargain hunting contributed to the rebound by treasuries following recent weakness due to Republican passage of their massive tax reform bill.

Traders were also digesting a slew of economic data, including a report from the Labor Department showing a bigger than expected increase in first-time claims for U.S. unemployment benefits in the week ended December 16th.

The report said initial jobless claims climbed to 245,000, an increase of 20,000 from the previous week’s unrevised level of 225,000. Economists had expected jobless claims to rise to 234,000.

A separate report from the Commerce Department showed economic activity in the U.S. unexpectedly grew at a slightly slower than previously estimated rate in the third quarter.

The report said real gross domestic product surged up by 3.2 percent in the third quarter compared to the previously estimated 3.3 percent jump. Economists had expected the pace of growth to be unrevised.

Despite the downward revision, the GDP growth seen in the third quarter still reflects a modest acceleration from the 3.1 percent increase in the second quarter.

Meanwhile, the Philadelphia Federal Reserve released a report showing an unexpected rebound in the pace of growth in regional manufacturing activity in the month of December.

The Philly Fed said its diffusion index for current general activity climbed to 26.2 in December from 22.7 in November, with a positive reading indicating growth in regional manufacturing activity. Economists had expected the index to drop to 21.5.

A report from the Conference Board also showed a slightly bigger than expected increase by its index of leading economic indicators.

The Conference Board said its leading economic index climbed by 0.4 percent in November after jumping by 1.2 percent in October. Economists had expected the index to rise by 0.3 percent.

Another batch of economic data may impact trading on Friday, with reports on personal income and spending, durable goods orders, new home sales and consumer sentiment likely to attract attention.

Traders are also likely to keep an eye on developments in Washington, as lawmakers seek to pass a short-term spending bill to avoid a government shutdown.

The material has been provided by InstaForex Company – www.instaforex.com