Ten-Year Yield Pulls Back To One-Month Low

(RTTNews) - Following the modest pullback seen in the previous session, treasuries move back to the upside during trading on Thursday.

Bond prices showed a lack of direction in morning trading before advancing in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 4.3 basis points to 4.449 percent.

The ten-year yield more than offset the 2.9 basis point increase seen on Wednesday, falling to its lowest closing level in a month.

The afternoon advance by treasuries came after the Treasury Department announced revealed this month's auction of $25 billion worth of thirty-year bonds attracted average demand.

The thirty-year bond auction drew a high yield of 4.635 percent and a bid-to-cover ratio of 2.41, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.39.

Treasuries also benefited from the release of a Labor Department report showing a much bigger than expected increase by first-time claims for U.S. unemployment benefits in the week ended May 4th.

The report said initial jobless claims climbed to 231,000, an increase of 22,000 from the previous week's revised level of 209,000.

Economists had expected jobless claims to inch up to 210,000 from the 208,000 originally reported for the previous week.

With the much bigger than expected increase, jobless claims reached their highest level since hitting 234,000 in week ended August 26th.

The data may added to recently renewed optimism that the Federal Reserve will lower interest rates in the coming months.

While the Fed is still widely expected to leave interest rates unchanged in June, the chances rates will be lower by September have reached 89.3 percent, according to CME Group's FedWatch Tool.

Trading on Friday may be impact by reaction to a report on consumer sentiment in the month of May, which includes readings on inflation expectations. Remarks by several Fed officials may also attract attention.