2018.10.2515:16:00UTC+00Treasuries Give Back Ground Amid Rebound On Wall Street

Treasuries saw modest weakness during trading on Thursday, giving back some ground after moving notably higher over the course of the two previous sessions.

Bond prices moved to the downside early in the session and remained stuck in negative territory throughout the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.2 basis points to 3.136 percent.

Profit taking contributed to the pullback by treasuries along a rebound by stocks on Wall Street, which moved sharply higher amid a positive reaction to upbeat earnings news from companies like Microsoft (MSFT) and Twitter (TWTR).

The weakness among treasuries also came following the release of some upbeat economic data, including a report from the Commerce Department showing an unexpected increase in durable goods orders in the month of September.

The report said durable goods orders climbed by 0.8 percent in September after surging up by 4.6 percent in August. Economists had expected orders to drop by 0.9 percent.

The unexpected increase in durable goods orders was largely due to a jump in orders for transportation equipment, which shot up by 1.9 percent in September after spiking by 13.2 percent in August.

Excluding orders for transportation equipment, durable goods orders inched up by just 0.1 percent in September after rising by 0.3 percent in August. Economists had expected a 0.3 percent increase.

The National Association of Realtors also released a report showing an unexpected rebound in pending home sales in September.

NAR said its pending home sales index climbed by 0.5 percent to 104.6 in September after tumbling by 1.9 percent to a revised 104.1 in August.

The rebound came as a surprise to economists, who had been expecting pending home sales to edge down by 0.1 percent.

A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.

Meanwhile, a separate report from the Labor Department showed a modest rebound in initial jobless claims in the week ended October 20th.

The Labor Department said initial jobless claims crept up to 215,000, an increase of 5,000 from the previous week's unrevised level of 210,000. Economists had expected jobless claims to inch up to 214,000.

Treasuries remained in negative territory following the release of the results of the Treasury Department's auction of $31 billion worth of seven-year notes, which attracted below average demand.

The seven-year note auction drew a high yield of 3.074 percent and a bid-to-cover ratio of 2.39, 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.

An initial reading on third quarter GDP may attract attention on Friday along with a revised report on consumer sentiment in October.