Treasuries Move To The Downside After Seeing Early Strength

(RTTNews) - After initially extending their recent upward trend, treasuries gave back ground over the course of the trading session on Thursday.

Bond prices pulled back well off their early highs and into negative territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.7 basis points to 3.894 percent.

In early trading, the ten-year yield fell as low as 3.829 percent, marking its lowest intraday level in almost five months.

Treasuries initially benefited from revised Commerce Department data showing consumer prices increased by less than previously estimated in the third quarter.

The Commerce Department said the surge in consumer prices in the third quarter was downwardly revised to 2.6 percent from 2.8 percent.

The increase in core consumer prices, which exclude food and energy prices, was also downwardly revised to 2.0 percent from 2.3 percent.

The revised inflation data was included in a report showing the spike in gross domestic product in the third quarter was downwardly revised to 4.9 percent from 5.2 percent. Economists had expected the pace of GDP growth to be unrevised.

"While third quarter GDP was revised slightly lower, the bigger news was the downward revisions to both headline and core PCE inflation, both of which showed faster progress toward the Fed's 2% target," said Michael Pearce, Lead US Economist at Oxford Economics.

He added, "That helps vindicate the Fed's dovish shift in messaging, and, if sustained, opens the door to earlier rate cuts than our current September forecast."

However, buying interest waned somewhat over the course of the session, as traders looked ahead to the release of some key U.S. economic data on Friday.

Traders are likely to keep a close eye on the Commerce Department's report on personal income and spending, which includes readings on inflation said to be preferred by the Federal Reserve.