Treasury prices fell on Thursday as speculation rose that economy may improve following positive economic figures and a government announcement of a U.S. tax rebate package to drive investment and consumer spending.

The U.S. Labor Department number said today that the number of unemployed workers applying for benefits unexpectedly dropped last week to its lowest level in four months, curbing some recession expectations.

In addition, Congressional leaders announced a plan that would give most tax filers refunds between $600 and $1,200 dollars and more if they had children. The total for rebates is about $100 billion, with another $50 billion for business tax breaks.

In an emergency meeting earlier this week, the Federal Reserve moved to calm expectations of a recession by making a deep 0.75 percent cut in interest rates, sending Treasuries lower.

The Ten-year note fell 28/32 to yield 3.709 percent, up from 3.60 percent late yesterday. The 2-year note was down 10/32 to yield 2.314 percent, up from 2.14 percent.