Treasuries Move Back To The Upside After Seeing Initial Weakness
After an initial move to the downside, treasuries showed a notable turnaround over the course of morning trading on Thursday.
Bond prices climbed well off their worst levels and remained firmly positive throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 4.1 basis points to 1.422 percent.
The rebound by treasuries came amid a sharp pullback on Wall Street, with stocks giving back ground after rallying in reaction to the Federal Reserve’s monetary policy announcement on Wednesday.
Treasuries benefited from their appeal as a safe haven even after the Fed announced plans to accelerate the pace of reductions in its bond purchases.
The Fed’s latest projections also suggested the central bank could raise interest rates three times next year compared to the previous forecast for a lone rate hike.
The strength that emerged in the bond market also came following the release of a slew of U.S. economic data, including a Labor Department report showing a modest rebound in first-time claims for unemployment benefits in the week ended December 11th.
The Labor Department said initial jobless claims rose to 206,000, an increase of 18,000 from the previous week’s revised level of 188,000.
Economists had expected jobless claims to inch up to 195,000 from the 184,000 originally reported for the previous week.
The slightly bigger than expected increase came after jobless claims fell to their lowest level since 1969 in the previous week.
The Fed also released a report showing U.S. industrial production increased by less than expected in the month of November.
The report said industrial production rose by 0.5 percent in November after surging by an upwardly revised 1.7 percent in October.
Economists had expected industrial production to climb by 0.7 percent compared to the 1.6 percent jump originally reported for the previous month.
A separate report from the Commerce Department showed housing starts and building permits both surged by much more than expected in the month of November.
Meanwhile, the Philadelphia Federal Reserve released a report showing a substantial slowdown in the pace of growth in regional manufacturing activity in December.
A lack of major U.S. economic data may keep some traders on the sidelines on Friday, as they continue to digest the Fed announcement.
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