Treasuries showed a significant move to the upside during trading on Thursday, offsetting the sharp pullback seen over the course of the previous session.
Bond priced moved modestly higher in early trading and climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled 10.8 basis points to 4.845 percent.
The rally by treasuries came despite the release of a largely upbeat batch of U.S. economic data, including a Commerce Department report showing GDP soared by more than expected in the third quarter of 2023.
The Commerce Department said GDP spiked by 4.9 percent in the third quarter after jumping by 2.1 percent in the second quarter. Economists had expected GDP to surge by 4.2 percent.
The stronger than expected GDP growth partly reflected a surge in consumer spending, which soared by 4.0 percent in the third quarter after climbing by 0.8 percent in the second quarter.
Treasuries may have befitted from the release of a Labor Department showing a modest rebound in first-time claims for U.S. unemployment benefits in the week ended October 21st.
The report said initial jobless claims rose to 210,000, an increase of 10,000 from the previous week’s revised level of 200,000.
Economists had expected jobless claims to rise to 208,000 from the 198,000 originally reported for the previous week.
The uptick came after jobless claims fell to their lowest level since hitting 199,000 in the week ended January 28th in the previous week.
Bond prices saw further upside after the Treasury Department revealed this month’s auction of $38 billion worth of seven-year notes attracted above average demand.
The seven-year note auction drew a high yield of 4.908 percent and a bid-to-cover ratio of 2.70, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
Earlier this week, the Treasury revealed this month’s auctions of $51 billion worth of two-year notes and $52 billion worth of five-year notes attracted below average demand.
The Commerce Department’s report on personal income and spending in September is likely to be in focus on Friday, as it includes readings on inflation said to be preferred by the Federal Reserve.
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