Treasuries Regain Ground Following Recent Weakness

(RTTNews) - After moving sharply lower over the two previous sessions, treasuries showed a strong move back to the upside during trading on Thursday.

Bond prices moved notably higher in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.0 basis points to 4.554 percent.

The rebound by treasuries may partly have reflected bargain hunting, with the ten-year yield pulling back off its highest closing level in almost a month.

Treasuries may also have benefited from a Commerce Department showing U.S. economic growth slowed by more than previously estimated in the first quarter of 2024.

The Commerce Department said gross domestic product climbed by 1.3 percent in the first quarter compared to the previously reported 1.6 percent jump.

The downwardly revised increase, which was in line with economist estimates, compares to the 3.4 percent surge in GDP in the fourth quarter of 2023.

The slower than previously estimated growth reflected downward revisions to consumer spending, private inventory investment and federal government spending.

"slowing consumption and economic growth could be just the news we need to see in order for the rate of inflation to keep coming down and allow the Fed to reduce interest rates after all," said said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

A separate report released by the National Association of Realtors showed a much sharper than expected pullback by pending home sales in the U.S. in the month of April.

Meanwhile, the Labor Department released a report showing first-time claims for U.S. unemployment benefits crept modestly higher in the week ended May 25th.

The report said initial jobless claims rose to 219,000, an increase of 3,000 from the previous week's revised level of 216,000.

Economists had expected jobless claims to inch up to 218,000 from the 215,000 originally reported for the previous week.

On Friday, the Commerce Department is due to release its report on personal income and spending in the month of April, which includes readings on inflation said to be preferred by the Federal Reserve.

Economists expect consumer prices to rise by 0.3 percent in April, matching the increase seen in March, while the annual rate of consumer price growth is expected to come in unchanged at 2.7 percent.

The data could have a significant impact on the outlook for interest rates, as Fed officials have repeatedly said they need "greater confidence" inflation is slowing before they will consider cutting rates.