Treasuries Move Sharply Higher Despite Upbeat Economic Data

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Treasuries moved sharply higher over the course of the trading day on Thursday, more than offsetting the modest pullback seen in the previous session.

Bond prices moved steadily higher throughout much of the session before closing firmly in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 10.8 basis points to 1.530 percent.

With the steep drop on the day, the ten-year yield ended the session at its lowest closing level in over a month.

The rally by treasuries came despite the release of a batch of largely upbeat U.S. economic data, which typically reduces the appeal of safe havens like bonds.

Analysts suggested the move came as the economic recovery was already priced into the bond markets when the yields on ten-year notes and thirty-year bonds jumped to their highest levels in over a year late last month.

Traders were presented with a slew of economic data on the day, including a Commerce Department report showing retail sales spiked by much more than expected in the month of March.

The Commerce Department said retail sales skyrocketed by 9.8 percent in March after tumbling by a revised 2.7 percent in February.

Economists had expected retail sales to surge up by 5.9 percent compared to the 3.0 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales soared by 8.4 percent in March after plunging by a revised 2.5 percent in February. Ex-auto sales were expected to jump by 5.0 percent.

A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by much more than anticipated in the week ended April 10th.

The Labor Department said initial jobless claims tumbled to 576,000, a decrease of 193,000 from the previous week’s revised level of 769,000.

Economists had expected jobless claims to decline to 700,000 from the 744,000 originally reported for the previous week.

With the much bigger than expected decrease, jobless claims fell to their lowest level since hitting 256,000 in the week ended March 14, 2020.

The National Association of Home Builders also released a report showing a modest increase in U.S. homebuilder confidence in the month of April.

The report said the NAHB/Wells Fargo Housing Market Index inched up to 83 in April after dipping to 82 in March, matching economist estimates.

The NAHB noted the uptick in homebuilder confidence came even as builders continued to grapple with rising lumber prices and supply chain issues and consumers faced higher home prices due to a lack inventory.

Meanwhile, the Federal Reserve released a report showing a rebound by industrial production in the month of March, although the increase fell short of expectations.

The Fed said industrial production jumped by 1.4 percent in March after plunging by a downwardly revised 2.6 percent in February.

However, economists had expected production to spike by 2.8 percent compared to the 2.2 percent slump originally reported for the previous month.

Following today’s avalanche of data, the economic calendar is relatively quiet on Friday, but traders are still likely to keep an eye on reports on housing starts and consumer sentiment.

The material has been provided by InstaForex Company – www.instaforex.com

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