After initially showing a lack of direction, treasuries moved to the upside over the course of the trading day on Thursday.
Bond prices moved higher in afternoon trading, closing firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.3 basis points to 0.908 percent.
The advance by treasuries came after the Treasury Department revealed its auction of $24 billion worth of thirty-year bonds attracted above average demand.
The thirty-year bond auction drew a high yield of 1.665 percent and a bid-to-cover ratio of 2.48, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.33.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Treasuries may also have benefited from lingering uncertainty about whether lawmakers can reach an agreement on a new fiscal stimulus bill.
The House has passed a one-week funding bill to avoid a government shutdown, although lawmakers remain at a stalemate over coronavirus relief.
The impasse partly reflects a dispute between Republicans and Democrats over including aid for state and local governments.
Meanwhile, traders were also reacting to a Labor Department report showing a significant increase in first-time claims for U.S. unemployment benefits in the week ended December 5th.
The report said initial jobless claims jumped to 853,000, an increase of 137,000 from the previous week’s revised level of 716,000.
Economists had expected jobless claims to rise to 725,000 from the 712,000 originally reported for the previous week.
With the much bigger than expected increase, jobless claims reached their highest level since hitting 873,000 in the week ended September 19th.
A separate report released by the Labor Department showed a modest increase in U.S. consumer prices in the month of November.
The Labor Department said its consumer price index rose by 0.2 percent in November after coming in unchanged in October. The uptick in consumer prices matched economist estimates.
Excluding food and energy prices, core consumer prices still edged up by 0.2 percent in November after showing no change in the previous month. Economists had expected core prices to inch up by 0.1 percent.
Developments in Washington are likely to remain in the spotlight on Friday, overshadowing reports on producer price inflation and consumer sentiment.
The material has been provided by InstaForex Company – www.instaforex.com