Treasuries Close Higher After Seeing Early Volatility

(RTTNews) - After showing a lack of direction in morning trading on Thursday, treasuries moved higher over the course of the afternoon.

Bond prices finished the session near their best levels of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 2.621 percent.

The higher close by treasuries came as the U.S. dollar rebounded following comments by President Donald Trump.

Trump expressed support for a strong dollar in an interview with CNBC, arguing that comments by Treasury Secretary Steven Mnuchin that seemed to welcome a weaker dollar were taken out of context.

Treasuries may also have benefited from the results of the Treasury Department's auction of $28 billion worth of seven-year notes, which attracted above average demand.

The seven-year note auction drew a high yield of 2.565 percent and a bid-to-cover ratio of 2.73, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.52.

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

Today's seven-year note auction came after the Treasury sold $26 billion worth of two-year notes on Tuesday and $34 billion worth of five-year notes on Wednesday.

Traders were also digesting a mixed batch of economic data, including a report from the Commerce Department showing a steep drop in new home sales in the month of December.

The report said new home sales plunged by 9.3 percent to an annual rate of 625,000 in December after surging up by 15 percent to a revised rate of 689,000 in November.

Economists had expected new home sales to slump to a rate of 679,000 from the 733,000 originally reported for the previous month.

A separate report from the Labor Department showed initial jobless claims bounced off their lowest level in nearly 45 years in the week ended January 20th.

The report said initial jobless claims rose to 233,000, an increase of 17,000 from the previous week's revised level of 216,000. Economists had expected jobless claims to climb to 240,000.

On the other hand, the Conference Board released a report showing a slightly bigger than expected increase by its index of leading economic indicators.

The Conference Board said its leading economic index climbed by 0.6 percent in December after rising by an upwardly revised 0.5 percent in November. The index has been expected to rise by 0.5 percent.

"The U.S. LEI continued rising rapidly in December, pointing to a continuation of strong economic growth in the first half of 2018," said Ataman Ozyildirim, Director of Business Cycles and Growth Research at the Conference Board.

Developments at the World Economic Forum in Davos, Switzerland, may impact trading on Friday along with preliminary data on fourth quarter GDP and a report on durable goods orders in December.