Treasuries Pull Back Off Early Highs To Close Nearly Flat Once Again

After moving to the upside early in the session, treasuries gave back ground over the course of the trading day on Thursday.

Bond prices pulled back well off their highs and closed nearly unchanged for the fourth consecutive session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.684 percent.

Concerns about the economic outlook contributed to the early strength among treasuries following indications the Federal Reserve plans to leave interest rates at near-zero levels for years to come.

Investors seemed to view the Fed’s forecast for rates at their current level until 2023 as a sign the economy recovery will not be as swift as many were hoping.

In his post-meeting press conference, Fed Chair Jerome Powell cautioned that the pace of the recovery is expected to slow and called for fiscal stimulus from Congress.

Buying interest waned over the course of the morning, however, as bond traders have seemed reluctant to make significant moves over the past several days.

On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits fell less than expected in the week ended September 12th.

The Labor Department said initial jobless claims slipped to 860,000, a decrease of 33,000 from the previous week’s revised level of 893,000.

Economists had expected jobless claims to dip to 850,000 from the 884,000 originally reported for the previous week.

The Commerce Department also released a report showing new residential construction pulled back by much more than expected in the month of August.

The report said housing starts tumbled by 5.1 percent to an annual rate of 1.416 million in August after soaring by 17.9 percent to a revised rate of 1.492 million in July.

Economists had expected housing starts to pullback by 1.2 percent to a rate of 1.478 million from the 1.496 million originally reported for the previous month.

The Labor Department said building permits also fell by 0.9 percent to an annual rate of 1.470 million in August after spiking by 17.9 percent to a revised rate of 1.483 million in July.

Building permits, an indicator of future housing demand, had been expected to increase by 1.7 percent to a rate of 1.520 million from the 1.495 million originally reported for the previous month.

A separate report from the Federal Reserve Bank of Philadelphia showed a modest slowdown in the pace of growth in regional manufacturing activity.

Trading on Friday may be impacted by reaction to a report on consumer sentiment, although trading activity is likely to remain somewhat subdued.

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