Treasuries Extend Upward Move But Pull Back Off Highs

(RTTNews) - After moving notably higher over the course of the two previous sessions, treasuries saw some further upside on Thursday but closed well off their best levels of the day.

Bond prices showed a strong upward move in early trading but gave back some ground as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 2.502 percent.

While the ten-year yield recovered after hitting an intraday low of 2.473 percent, it still ended the session at a new six-month closing low.

The strength among treasuries was partly due to continued speculation regarding further European stimulus measures next month.

Treasuries also reacted positively to the day's batch of mixed U.S. economic data, with weaker than expected readings on industrial production and homebuilder confidence seemingly overshadowing an upbeat jobs report.

Early in the day, the Federal Reserve released a report showing an unexpected drop in industrial production in the month of April.

The Fed said industrial production fell by 0.6 percent in April following an upwardly revised 0.9 percent increase in March. Economists had expected production to come in unchanged.

The National Association of Home Builders released a separate report showing that homebuilder confidence has unexpectedly deteriorated in the month of May.

The report showed that the NAHB/Wells Fargo Housing Market Index edged down to 45 in May from a revised 46 in April. The drop surprised economists, who had expected the index to climb to a reading of 49 from the 47 originally reported for the previous month.

With the unexpected decrease, the Housing Market Index dropped to its lowest level since hitting 44 in May of 2013.

On the other hand, the Labor Department released a report showing that initial jobless claims fell to a seven-year low in the week ended May 10th.

The Labor Department said initial jobless claims fell to 297,000, a decrease of 24,000 from the previous week's revised level of 321,000. The drop pulled jobless claims down to their lowest level since hitting a matching number in the week ended May 12, 2007.

A separate Labor Department report showed that consumer prices increased in line with economist estimates in April.

Following today's slew of data, the economic calendar for Friday is relatively quiet, although traders are still likely to keep an eye on reports on housing starts and consumer sentiment.