Treasuries Extend Upward Trend But Close Off Early Highs

After extending their recent rally in early trading on Thursday, treasuries gave back some ground as the session progressed.

Bond prices still closed firmly in positive territory but off their best levels of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 3.3 basis points to 1.288 percent after hitting a low of 1.268 percent.

With the continued decrease on the day, the ten-year yield once again ended the session at its lowest closing level since February.

The early strength among treasuries came as concerns about the outlook for the global economy weighed on stocks across the globe.

News that Japan has declared a new state of emergency for Tokyo ahead of the Olympic Games added to worries about the impact of new coronavirus variants.

The U.S. economy has recovered strongly from the pandemic-induced slump, but the rapid spread of variants in other parts of the world has raised concerns about a global slowdown.

Adding to worries about the economy, the Labor Department released a report showing initial jobless claims unexpectedly inched higher in the week ended July 3rd.

The Labor Department said initial jobless claims crept up to 373,000, an increase of 2,000 from the previous week’s revised level of 371,000.

The uptick surprised economists, who had expected jobless claims to drop to 350,000 from the 364,000 originally reported for the previous week.

Meanwhile, the Treasury Department announced the details of this month’s auctions of three-year and ten-year notes and thirty-year bonds.

The Treasury revealed it plans to sell $58 billion worth of three-year notes, $38 billion worth of ten-year notes and $24 billion worth of thirty-year bonds.

The results of both the three-year and ten-year note auctions will be announced next Monday, while the results of the thirty-year bond auction will be announced next Tuesday.

Looking ahead, trading activity may be somewhat subdued on Friday amid a relatively quiet day on the U.S. economic front, with traders likely to keep an eye on developments overseas.

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