Treasuries Pull Back Sharply Following Jobless Claims Data

After trending higher over the past few sessions, treasuries showed a significant move back to the downside during trading on Thursday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, spiked 11.2 basis points to 3.854 percent.

The sharp pullback by treasuries came after the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly dipped in the week ended July 15th.

The report said initial jobless claims slipped to 228,000, a decrease of 9,000 from the previous week’s unrevised level of 237,000. Economists had expected jobless claims to inch up to 242,000.

The data inspired some traders to cash in on recent strength in the bond market as traders looked ahead to next week’s Federal Reserve meeting.

“For the last several weeks, seasonal factors have been lending a downward bias to the data, but that will shift next week,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

“Seasonal noise aside, the claims data are consistent with a labor market that may becoming less tight but is still characterized by very few layoffs,” she added. “The FOMC is still on track, in our view, to raise rates at its meeting next week.”

Meanwhile, the National Association of Realtors released a separate report on showing U.S. existing home sales fell by more than expected in the month of June.

NAR said existing home sales tumbled by 3.3 percent to an annual rate of 4.16 million after inching up by 0.2 percent to a rate of 4.30 million in May. Economists had expected existing home sales to decrease to a rate of 4.23 million.

With the bigger than expected slump, existing home sales fell to their lowest level since hitting a rate of 4.00 million in January.

A lack of major U.S. economic data may keep some traders on the sidelines on Friday, as continue to look ahead to next week’s Fed meeting.

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