Treasuries Climb Off Worst Levels But Still Close Slightly Lower

(RTTNews) - After coming under pressure in early trading on Thursday, treasuries regained some ground but still ended the day slightly lower.

While bond prices climbed well off their worst levels of the day, they were unable to sustain the recovery attempt. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by nearly a basis point to 2.178 percent.

The slight increase on the day still lifted the ten-year yield off the nearly two-month closing low set in the previous session.

The early weakness among treasuries came following the release of a report from the Commerce Department report showing a bigger than expected increase in U.S. retail sales in the month of November.

The report said retail sales climbed by 0.7 percent in November following an upwardly revised 0.5 percent increase in October. Economists had expected sales to rise by 0.4 percent.

The better than expected data has generated optimism about the holiday shopping season, which is the most important time of the year for retailers.

However, treasuries bounced off their lows for the session following the release of the results of the Treasury Department's auction of $13 billion worth of thirty-year bonds, which attracted above average demand.

The thirty-year bond auction drew a high yield of 2.848 percent and a bid-to-cover ratio of 2.76, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.43.

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 recovery attempt by treasuries also came on the heels of news that House leaders postponed a vote on a $1.1 trillion spending bill needed to avoid another government shutdown.

With the bill facing opposition from both sides of the aisle and a midnight deadline looming, the House may vote on a stopgap bill to give lawmakers more time to negotiate.

Developments in Washington are likely to be in focus on Friday along with the release of reports on producer price inflation and consumer sentiment.