Treasuries Extend Downward Move Amid Inflation Worries

(RTTNews) - Treasuries came under pressure during trading on Thursday, extending the notable downward move seen over the past several sessions.

Bond prices fluctuated early in the session but slid firmly into negative territory as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.3 basis points to 2.011 percent.

The ten-year yield closed higher for the fourth consecutive session, ending above 2 percent for the first time in almost a month.

Worries about inflation continued to weigh on treasuries, as a report from the Labor Department showed a continued acceleration in the annual rate of U.S. consumer price growth in the month of February.

The report showed the annual rate of consumer price growth accelerated to 7.9 percent in February from 7.5 percent in January, reaching the highest rate since January 1982.

The faster year-over-year price growth came as consumer prices climbed by 0.8 percent in February after rising by 0.6 percent in January. The increase in prices matched economist estimates.

Excluding food and energy prices, core consumer prices rose by 0.5 percent in February following a 0.6 percent increase in January. The core price growth also matched expectations.

The annual rate of core consumer price growth accelerated to 6.4 percent in February from 6.0 percent in January, showing the fastest growth since August 1982.

A separate report from the Labor Department showed a modest increase in initial jobless claims in the week ended March 5th.

The report showed initial jobless claims crept up to 227,000, an increase of 11,000 from the previous week's revised level of 216,000.

Economists had expected jobless claims to tick up to 216,000 from the 215,000 originally reported for the previous week.

Meanwhile, traders largely shrugged off the results of the Treasury Department's auction of $20 billion worth of thirty-year bonds, which attracted well above average demand.

The thirty-year bond auction drew a high yield of 2.375 percent and a bid-to-cover ratio of 2.46, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.28.

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

A preliminary report on consumer sentiment in March may attract some attention on Friday, although traders are likely to pay closer attention to developments in Ukraine.