Treasuries Close Firmly Negative But Off Worst Levels

(RTTNews) - Treasuries saw notable weakness during trading on Thursday but ended the session off their worst levels of the session.

While bond prices climbed off their lows, they remained firmly in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 5.3 basis points to 1.843 percent.

With the increase on the day, the ten-year yield reached its highest closing level in nearly five months.

The weakness among treasuries was partly due to the release of stronger than expected U.K. GDP data, which eased concerns about the global economy.

The Office for National Statistics said U.K. GDP climbed 0.5 percent sequentially in third quarter, faster than the expected growth of 0.3 percent.

On the U.S. economic front, the the Labor Department released a report showing a modest drop in initial jobless claims in the week ended October 22nd.

The report said initial jobless claims edged down to 258,000, a decrease of 3,000 from the previous week's revised level of 261,000. Economists had expected jobless claims to dip to 255,000.

A separate report from the Commerce Department showed an unexpected drop in durable goods orders in the month of September.

The Commerce Department said durable goods orders dipped by 0.1 percent in September after rising by a revised 0.3 percent in August. Orders had been expected to rise by 0.2 percent.

Excluding orders for transportation equipment, durable goods orders rose by 0.2 percent in September after inching up by a revised 0.1 percent in August. Economists had expected ex-transportation orders to tick up by 0.1 percent.

Meanwhile, the National Association of Realtors released a report showing a significant rebound in pending home sales in the month of September.

NAR said its pending home sales index jumped by 1.5 percent to 110.0 in September after tumbling by 2.5 percent to a revised 108.4 in August. Economists had expected pending sales to climb by 1.0 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Meanwhile, treasuries remained in the red following the release of the results of the Treasury Department's auction of $28 billion worth of seven-year notes, which attracted average demand.

The seven-year note auction drew a high yield of 1.653 percent and a bid-to-cover ratio of 2.49, which matched the average of the ten previous seven-year note auctions.

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

Trading on Friday may be impacted by reaction to the advance report on third quarter GDP, which is expected to show 2.5 percent growth.