Treasuries Regain Ground Following Recent Pullback

Treasuries moved back to the upside during trading on Thursday, regaining ground after moving sharply lower over the three previous sessions.

Bond prices fluctuated over the course of the session but largely maintained a positive bias. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.2 basis points to 1.487 percent.

The rebound by treasuries came as traders picked up bonds at somewhat reduced levels following the sharp pullback seen in recent sessions.

With concerns about the impact of the Omicron variant easing, traders are now looking ahead to the Federal Reserve’s monetary policy announcement next week.

Reports suggest the Fed could decide to double the pace of tapering its asset purchase program to $30 billion per month.

A report on consumer price inflation due to be released on Friday could impact the outlook for Fed policy, leading some traders to look for safe havens ahead of the data.

The Labor Department released a report this morning showing first-time claims pulled back by much more than expected in the week ended December 4.

The report said initial jobless claims slid to 184,000, a decrease of 43,000 from the previous week’s revised level of 227,000.

Economists had expected jobless claims to edge down to 215,000 from the 222,000 originally reported for the previous week.

With the bigger than expected decrease, jobless claims dropped to their lowest level since hitting 182,000 in September of 1969.

Treasuries gave back some ground after the Treasury Department revealed this month’s auction of $22 billion worth of thirty-year bonds attracted below average demand.

The thirty-year bond auction drew a high yield of 1.895 percent and a bid-to-cover ratio of 2.22, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.29.

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

Earlier this week, the Treasury revealed this month’s auctions of $54 billion worth of three-year notes and $36 billion worth of ten-year notes also attracted below average demand.

The report on consumer price inflation is likely to be in the spotlight on Friday, although traders are also likely to keep an eye on a preliminary reading on consumer sentiment in December.

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