Treasuries are showing considerable weakness in the early going Thursday, as traders move from the safety of bonds to fund another rally in the stock market. The move came as a strong earnings forecast from a major bank raised hope for the beleaguered financial sector, driving investors into stocks.
Investors also focused on the latest batch of economic data, which indicated some moderation of layoffs and a contraction in the U.S. trade deficit.
The benchmark ten-year note has pushed steadily into negative territory during the course of the morning. The yield on the note, which moves the opposite direction as its price, is up to 2.924 percent, a rise of 7.7 basis points on the day.
Stocks are rallying in early trading, after Wells Fargo said it would post a first-quarter profit of $3 billion. This eased fears about the health of the financial sector, which helped prompt some profit taking in equities earlier this week. The Dow is up more than 160 points in the opening minutes of trading on Wall Street, a gain of about 2 percent.
The Labor Department said jobless claims fell to 654,000 from the previous week's revised figure of 674,000. Economists had expected jobless claims to edge down to 660,000 from the 669,000 originally reported for the previous week.
Meanwhile, a report from the Commerce Department showed that the U.S. trade deficit narrowed to $25.97 billion in February, from the previous month's shortfall of $36.2 billion.
A third report released during the morning indicated that import prices rose 0.5 percent in March following a revised 0.1 percent decrease in February. The increase in import prices marks the first price growth in eight months.
Export prices fell 0.6 percent in March after edging down 0.3 percent in the previous month. With the decrease, export prices fell for the seventh time in the past eight months.
Later this morning, some traders are likely to turn their attention to the auction of the ten-year note, which known as a benchmark security in the bond market.
In addition, investors will compare the results of the auction to the outcome of the ten-year TIPS sale held Tuesday. The spread between the securities is likely to give an indication of near-term inflation.
The government will sell $18.0 billion worth of ten-year notes with a maturity date set for February 15th, 2019. The auction is scheduled to take place at 11:30 a.m. ET.
The previous auction of ten-year notes took place early last month, when the Treasury sold $18.0 billion worth of the securities. The auction drew a high yield of 3.681 percent while attracting modest demand, with the bid-to-cover ratio coming in at a level of 2.14.
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