Treasuries Move Modestly Lower Amid Easing Trade Concerns

Treasuries saw modest weakness during trading on Thursday, giving back some ground following the strength seen in the previous session.

Bond prices recovered from an initial move to the downside but remained stuck in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.1 basis points to 2.853 percent.

The pullback by treasuries came amid easing trade concerns after news of U.S. threats of a new 10 percent tariff on $200 billion worth of Chinese imports contributed to strength on Wednesday.

China vowed to take countermeasures in response to the new tariffs, although analysts pointed to the lack of an announcement of specific retaliation by the Chinese.

Traders also seem optimistic the continued tariff threats will eventually bring the U.S. and China to the table for talks that could result in a long-term trade agreement.

On the U.S. economic front, the Labor Department released a report showing consumer prices edged slightly higher in the month of June.

The Labor Department said its consumer price index inched up by 0.1 percent in June after rising by 0.2 percent in May. Economists had expected consumer prices to increase by 0.2 percent.

Excluding food and energy prices, core consumer prices rose by 0.2 percent for the second consecutive month, matching economist estimates.

While consumer prices showed only a modest monthly increase, the annual rate of growth still accelerated to a more than six-year high of 2.9 percent in June from 2.8 percent in May.

Core consumer price growth also edged up to 2.3 percent in June from 2.2 percent in May, reaching its highest level since January of 2017.

A separate report from the Labor Department showed first-time claims for unemployment benefits fell by more than expected in the week ended July 7th.

The report said initial jobless claims dropped to 214,000, a decrease of 18,000 from the previous week’s revised level of 232,000. Economists had expected jobless claims to edge down to 225,000.

Meanwhile, the Treasury Department’s auction of $14 billion worth of thirty-year bonds attracted modestly below average demand.

The thirty-year bond auction drew a high yield of 2.958 percent and a bid-to-cover ratio of 2.34, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.40.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Economic data may attract attention on Friday, with traders likely to keep an eye on reports on import and export prices and consumer sentiment.

by RTTNews Staff Writer

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