Following the sharp pullback seen in the previous session, treasuries showed another significant move to the downside during trading on Thursday.
Bond prices fluctuated early in the day but slid firmly into negative territory as the session progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.9 basis points to 4.226 percent.
The ten-year yield added to the 12.9 basis point surge seen on Wednesday, once again ending the session at its highest closing level in over fourteen years.
Concerns about the outlook for interest rates continued to weigh on treasuries, as the Federal Reserve’s next monetary policy meeting is less than two weeks away.
The Fed is widely expected to raise interest rates by another 75 basis points, brining the target for the federal funds rate to 3.75 to 4.0 percent.
“Markets expect the Fed to deliver another 75 basis point increase in November and the odds are rising that they could do that again in December,” said Edward Moya, senior market analyst at OANDA.
Adding to the negative sentiment in the bond market, Philadelphia Federal Reserve President Patrick Harker said today that he expects the Fed to continue raising rates “for a while.”
“Given our frankly disappointing lack of progress on curtailing inflation, I expect we will be well above 4 percent by the end of the year,” Harker said in prepared remarks before the Greater Vineland Chamber of Commerce in New Jersey.
Harker predicted the Fed would eventually stop hiking rates sometime next year but said the central bank should keep rates at a restrictive level to allow the higher cost of capital to work its way through the economy.
On the U.S. economic front, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly edged lower in the week ended October 15th.
The report showed initial jobless claims slipped to 214,000, a decrease of 12,000 from the previous week’s revised level of 226,000.
The dip surprised economists, who had expected jobless claims to inch up to 230,000 from the 228,000 originally reported for the previous week.
The National Association of Realtors also released a report showing a continued decrease in U.S. existing home sales in the month of September.
NAR said existing home sales slid 1.5 percent to an annual rate of 4.71 million in September after falling by 0.8 percent to a revised rate of 4.78 million in August.
Economists had expected existing home sales to slump by 2.1 percent to a rate of 4.70 million from the 4.80 million originally reported for the previous month.
A separate report from the Philadelphia Federal Reserve showed a continued contraction in regional manufacturing activity in the month of October.
Looking ahead, trading activity may be somewhat subdued on Friday amid a lack of major U.S. economic data.
Source: Read Full Article