Treasuries Give Back Ground Following Recent Strength

(RTTNews) - After moving sharply higher over the past few sessions, treasuries gave back some ground during trading on Thursday.

Bond prices came under pressure in early trading and remained stuck in the red throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 4.2 basis points to 2.023 percent.

With the increase on the day, the ten-year yield moved back to the upside after ending the previous session at its lowest closing level in well over five months.

The pullback by treasuries came following the release of a slew of U.S. economic data, including a Labor Department report showing an unexpected drop in initial jobless claims.

The report said initial jobless claims fell to 255,000 in the week ended October 10th, matching their lowest level in over forty years. Economists had expected jobless claims to climb to 270,000.

A separate report from the Labor Department said consumer prices fell in line with estimates in the month of September, although the report also showed that core prices rose slightly more than expected.

The Labor Department said its consumer price index slipped by 0.2 percent in September after edging down by 0.1 percent in August. Economists had expected prices to dip by 0.2 percent.

Excluding food and energy prices, the core consumer price index rose 0.2 percent in September following a 0.1 percent uptick in August. Core prices had been expected to inch up by another 0.1 percent.

Compared to the same month a year ago, the headline consumer price index was essentially unchanged in September, while the core index was up by 1.9 percent.

Steve Murphy, U.S. Economist at Capital Economics, said, "Overall, there is nothing in this report that would persuade Fed officials to hike interest rates before the end of this year."

"But it will be much harder to leave rates at near-zero next year when possibly both headline and core CPI inflation will be above 2%," he added.

Meanwhile, the New York and Philadelphia Federal Reserves released separate reports showing continued contractions in regional manufacturing activity in October.

Trading on Friday may be impacted by the Fed's report on industrial production as well as the University of Michigan's preliminary report on consumer sentiment.