Treasuries Pull Back Further Off Wednesday's Highs

(RTTNews) - Treasuries moved notably lower over the course of the trading day on Thursday, extending the pullback off yesterday's highs.

Bond prices came under pressure in early trading and remained firmly in negative territory throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.9 basis points to 2.189 percent.

With the increase on the day, the ten-year yield bounced further off the three-month intraday low set during trading on Wednesday.

The early weakness among treasuries was partly due to easing concerns about the Chinese currency as the People's Bank of China held a press conference to clarify its intentions regarding its recent devaluation moves.

During the press conference, PBOC Vice-governor Yi Gang dismissed rumors the bank is trying to devalue the currency by 10 percent in order to boost exports as "nonsense."

Julian Evans-Pritchard, China Economist at Capital Economics, said, "Today's PBOC press conference supports our view that the fall in the renminbi as a result of the shift to a new reference rate mechanism was a one-off and not an attempt to engineer a large scale competitive depreciation."

Traders were also presented with a slew of U.S. economic data, including a report from the Commerce Department showing that retail sales rose in line with estimates in July.

The Commerce Department said retail sales rose by 0.6 percent in July, while revised data showed that sales were unchanged in June.

Sales had been expected to climb by 0.6 percent compared to the 0.3 percent drop originally reported for the previous month.

A separate report from the Commerce Department showed a much bigger than expected increase in business inventories in June, while the Labor Department reported a modest increase in weekly jobless claims.

Treasuries remained stuck in the red following the release of the results of the Treasury Department's auction of $16 billion worth of thirty-year bonds, which attracted slightly below average demand.

The thirty-year bond auction drew a high yield of 2.880 percent and a bid-to-cover ratio of 2.26, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.34.

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

Trading on Friday may be impacted by another batch of U.S. economic data, including reports on producer prices, industrial production, and consumer sentiment.