Treasuries Move Back To The Downside Amid Continued Strength On Wall Street

Following the rebound seen in the previous session, treasuries moved back to the downside during the trading day on Thursday.

Bond prices came under pressure early in the day and remained firmly negative throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.6 basis points to 1.493 percent.

The pullback by treasuries came as stocks on Wall Street moved notably higher, extending the strong upward move seen over the two previous session.

Easing concerns about the Omicron variant of the coronavirus also reduced the appeal of treasuries, as separate studies have indicated the new strain poses a lower risk of severe disease and hospitalization than the Delta variant.

However, experts such as the World Health Organization have cautioned that it is too early to draw conclusions on the new variant’s severity.

Traders were also reacting to a slew of U.S. economic data, including reports on weekly jobless claims, durable goods orders and personal income and spending.

The Labor Department released a report showing first-time claims for U.S. unemployment benefits came in flat in the week ended December 18th.

The report said initial jobless claims were unchanged from the previous week’s revised level of 205,000. Economists had expected jobless claims to edge down to 205,000 from the 206,000 originally reported for the previous week.

A separate report released by the Commerce Department showed new orders for U.S. manufactured durable goods spiked much more than expected in the month of November.

The Commerce Department said durable goods orders surged up by 2.5 percent in November following a revised 0.1 percent uptick in October.

Economists expected durable goods orders to jump by 1.6 percent compared to the 0.4 percent drop that had been reported for the previous month.

Excluding a sharp increase in orders for transportation equipment, durable goods orders climbed by 0.8 percent in November after rising by 0.3 percent in October. Ex-transportation orders were expected to increase by 0.6 percent.

Meanwhile, the Commerce Department also released a report showing a continued acceleration in the pace of core consumer price growth.

A reading on inflation said to be preferred by the Federal Reserve showed the annual rate of core consumer price growth accelerated to 4.7 percent in November from 4.2 percent in October.

The annual rate of core consumer price growth exceeded the 4.5 percent expected by economists, reaching the highest level since 1989.

The data was included as part of a report showing personal income and spending both increased in line with economist estimates in November.

Another Commerce Department report showed new home sales skyrocketed in the month of November, although the sharp increase came from a substantially downwardly revised level in October.

A light economic calendar may lead to light trading activity next week, although traders may still look to make some year-end moves.

Bond traders are likely to keep an eye on the results of the Treasury Department’s auctions of two-year, five-year and seven-year notes.

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