Treasuries Close Notably Higher Amid Sell-Off On Wall Street

(RTTNews) - After ending the previous session firmly in the red, treasuries showed a strong move to the upside over the course of the trading day on Thursday.

Bond prices moved steadily higher for much of the session before moving roughly sideways going into the close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.8 basis points to 2.511 percent.

With the drop, the ten-year yield more than offset yesterday's gain, pulling back further off the two-month closing high set a week ago.

The rebound by treasuries was partly due to a substantial sell-off on Wall Street, with the Dow tumbling by 250 points.

The weakness among stocks led traders to look for safer havens like treasuries, which also benefited from the appeal of their higher relative yields.

Geopolitical concerns also helped push treasuries higher amid the expanding conflict in the Middle East as well as reports that Russia is considering a law that would allow their courts to seize foreign assets in response to Western sanctions.

Treasuries saw continued strength following the release of the results of the Treasury Department's auction of $29 billion worth of seven-year notes.

The seven-year note drew a high yield of 2.235 percent and a bid-to-cover ratio of 2.48, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.56.

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

On the economic front, the Labor Department released a report showing a modest rebound in initial jobless claims in the week ended September 20th.

The report said initial jobless claims climbed to 293,000, an increase of 12,000 from the previous week's revised level of 281,000. Economists had expected jobless claims to rise to 300,000.

A separate report from the Commerce Department showed a sharp pullback in durable goods orders in August following the substantial increase seen in July, reflecting volatility in commercial aircraft orders.

The report said durable goods orders tumbled by 18.2 percent in August after surging up by 22.5 percent in July. Economists had been expecting orders to plunge by about 18.0 percent.

Excluding orders for transportation equipment, durable goods orders actually rose by 0.7 percent in August compared to a 0.5 percent drop in July. The rebound matched economist estimates.

Trading on Friday could be impacted by the final reading on second quarter GDP as well as a report on consumer sentiment.