Treasurys slip as unemployment claims show decline

AP News
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Posted: Oct 21, 2010 5:31 PM
Treasurys slip as unemployment claims show decline

Treasury prices slipped on Thursday as traders took profits and unemployment claims fell.

The government said first-time filings for unemployment benefits fell to 452,000 last week. That's 23,000 fewer people signing up for unemployment than in the previous week and below the 455,000 economists expected to see.

Any hint the economy is on the mend helps nudge Treasury prices lower and yields higher, as investors become more willing to take risks.

Market strategists expect to see Treasurys trade in a tight range until the Federal Reserve wraps up its next meeting on Nov. 3. That's when many believe the Fed will begin a new bond-buying campaign to push interest rates lower and prod businesses and consumers to spend.

In late afternoon trading, the 10-year note fell 53.1 cents, raising the yield to 2.54 percent from 2.48 percent in late trading Wednesday. The yield has averaged 2.55 percent over the past month.

The 30-year bond lost $1.15, lifting the yield from 3.89 percent to 3.95 percent. Unlike other Treasurys, the 30-year bond has steadily lost ground, pushing the yield up from 3.66 percent over the past two months. The main reason: the long bond is the most sensitive to inflation, what traders fear could be an unintended result of the Fed's action.

The 2-year yield ended the trading day at 0.36 percent, up from 0.35 percent late Wednesday. Short-term yields are kept on a tight leash by the Federal Reserve's near-zero federal funds rate.

In the Treasury bill market, the 3-month T-bill paid a 0.12 percent yield at a discount of 0.13 percent.