Better data, poor auction knock bonds lower

NEW YORK (BestGrowthStock) – U.S. Treasuries fell on Thursday after jobs and trade data suggested the economy wasn’t as weak as feared, boosting riskier assets such as stocks and hurting demand at the government’s long-bond auction.

New U.S. claims for unemployment benefits fell more than expected last week to a two-month low, while the trade deficit narrowed sharply in July, providing hopeful signs for the stuttering economic recovery and fueling losses in safe-haven bonds.

The news got worse for the Treasury market when bidders held out for higher-than-expected yields at a $13 billion auction of 30-year bonds. This “tail” indicated there were limits to investor appetite for debt given their low yields.

Though Thursday’s sale was the only poor one of this week’s three offerings, which totaled $67 billion, it hints that the market might be over-priced if the economy is healthier than analysts had feared.

“Demand at the long end has been waning since a couple of weeks ago when the market was pricing in the world coming to an end, and clearly that’s hasn’t happened,” said Michael Pond, Treasury strategist with Barclays Capital in New York.

“The data have been consistent with a slowdown but not sub-1.0 percent growth,” he said.

Trading on the open market, 30-year Treasury bonds were last down 1-22/32 in price, yielding 3.83 percent versus Wednesday’s close of 3.74 percent. They were down 28/32 just before the auction results were announced.

(Additional reporting by Richard Leong)

(Reporting by Burton Frierson; Editing by Theodore d’Afflisio)

Better data, poor auction knock bonds lower