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Treasuries Move Back To The Upside Following Latest Data

Following the sharp pullback seen in the previous session, treasuries showed a strong move back to the upside during trading on Thursday.

Bond prices moved notably higher in early trading and remained firmly positive throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 9.0 basis points to 4.445 percent.

The ten-year yield largely offset the 9.4 basis point jump seen on Wednesday, closing just above Tuesday’s nearly two-month closing low.

The rebound by treasuries came as the latest batch of U.S. economic data added to recent optimism about the outlook for interest rates.

The Labor Department released a report showing U.S. import and export prices both fell by more than expected in the month of October, capping off an encouraging week of inflation data.

The report said import prices slid by 0.8 percent in October after climbing by an upwardly revised 0.4 percent in September.

Economists had expected import prices to decrease by 0.3 percent compared to the 0.1 percent uptick originally reported for the previous month.

Meanwhile, the Labor Department said export prices slumped by 1.1 percent in October after rising by a downwardly revised 0.5 percent in September.

Export prices were expected to decline by 0.5 percent compared to the 0.7 percent increase originally reported for the previous month.

A separate Labor Department report showing initial jobless claims climbed by much more than expected in the week ended November 11th.

The Labor Department said initial jobless claims rose to 231,000, an increase of 13,000 from the previous week’s revised level of 218,000.

Economists had expected jobless claims to inch up to 220,000 from the 217,000 originally reported for the previous week.

With the bigger than expected, jobless claims reached their highest level since hitting 232,000 in the week ended August 19th.

“The claims data are consistent with a job market that is cooling enough to keep rate hikes off the table, but too strong to make rate cuts a consideration any time soon,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, “The Fed is surely encouraged by recent inflation data but needs to see a further slowdown in the labor market and wage growth to be persuaded that inflation is on a sustainable path back to 2%.”

The Federal Reserve also released a report showing industrial production fell by more than expected in October due in part to the strikes at several major motor vehicle manufacturers.

The U.S. economic calendar is relatively quiet on Friday, although a report on new residential construction may attract attention along with remarks by several Fed officials.

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