After moving sharply higher over the course of the previous session, treasuries saw further upside during trading on Thursday.
Bond prices fluctuated early in the session but climbed firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 9.4 basis points to 3.406 percent.
The extended upward by treasuries came as traders continued to react to yesterday’s monetary policy announcement by the Federal Reserve.
While some traders were initially disappointed the Fed decided to continue raising rates despite recent banking industry turmoil, indications the central bank is nearing the end of its tightening cycle generated some buying interest.
The latest projections suggest the Fed plans just one more quarter-point rate increase this year, with CME Group’s FedWatch Tool currently indicating a 27.4 percent chance the rate hike will come in May and a 72.6 percent chance rates will remain unchanged.
Even if the Fed raises rates again at its next meeting, traders may take some comfort in knowing officials feel a range of 5.0 to 5.25 percent will be the so-called “terminal rate.”
In U.S. economic news, a report released by the Labor Department unexpectedly showed a slight decrease by first-time claims for U.S. unemployment benefits in the week ended March 18th.
The Labor Department said initial jobless claims slipped to 191,000, a decrease of 1,000 from the previous week’s unrevised level of 192,000. Economists had expected jobless claims to rise to 201,000.
The report said the less volatile four-week moving average also edged down to 196,250, a decrease of 250 from the previous week’s unrevised average of 196,500.
The Commerce Department also released a report showing new home sales in the U.S. increased from a significantly downwardly revised level in the month of February.
The report said new home sales climbed by 1.1 percent to an annual rate of 640,000 in February after jumping by 1.8 percent to a downwardly revised rate of 633,000 in January.
Economists had expected new home sales to pull back to an annual rate of 645,000 from the 670,000 originally reported for the previous month.
Trading activity on Friday may be impacted by reaction to a report on durable goods orders in the month of February.
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