Treasuries Pull Back Further Off Their Recent Highs

(RTTNews) - After moving lower over the course of the previous session, treasuries saw some further downside during trading on Thursday.

Bond prices moved steadily lower throughout much of the session, ending the day firmly in the red. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped by 8.7 basis points to 2.007 percent.

With the increase on the day, the ten-year yield continued to regain ground after ending Tuesday's trading at its lowest closing level in well over a month.

Treasuries came under pressure in morning trading and saw further weakness following the Treasury Department's disappointing auction of $29 billion worth of seven-year notes.

The seven-year note auction drew a high yield of 1.792 percent and a bid-to-cover ratio of 2.32, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.50.

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

The latest auction's bid-to-cover ratio was well below the recent average and at the lowest level since May of 2009.

Peter Boockvar, managing director at the Lindsey Group, said, "Bottom line, the very weak auction on the heels of the soft one yesterday is in the context of a sharp drop in yields over the past few weeks but it is helping to establish a level of yields that are no longer attractive to investors."

"This back up in yields is also noteworthy in that it's happening coincident with a pullback in stocks," he added. "But, it's also happening with a weaker U.S. dollar and rise in commodity prices."

Earlier in the day, selling pressure was generated by the release of a report from the Labor Department showing a bigger than expected pullback in initial jobless claims in the week ended March 21st.

The report said initial jobless claims fell to 282,000, a decrease of 9,000 from the previous week's unrevised level of 291,000. Economists had expected jobless claims to edge down to 290,000.

With the drop, jobless claims pulled back further off the nine-month high set in the last week of February and hit their lowest level in over a month.

Economic data may also attract some attention on Friday, with traders likely to keep an eye on revised fourth quarter GDP data as well as a report on consumer sentiment.