2021.04.2919:17:00UTC+00Treasuries Climb Well Off Worst Levels But Close Modestly Lower

After coming under pressure early in the session, treasuries regained ground over the course of the trading day on Thursday.

Bond prices climbed well off their worst levels but still closed in the red. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 1.640 percent after reaching a high of 1.688 percent.

The early weakness among treasuries came following the release of preliminary data from the Commerce Department showing an acceleration in the pace of U.S. economic growth in the first three months of 2021.

The report said real gross domestic product surged up by 6.4 percent in the first quarter after jumping by 4.3 percent in the fourth quarter of 2020. Economists had expected GDP to increase by 6.5 percent.

Paul Ashworth, Chief U.S. Economist at Capital Economics, said the first quarter growth left the level of GDP only 1 percent off its pre-pandemic peak in the final quarter of 2019.

"It will recapture that level in the second quarter and, with the pace of growth we expect, any remaining output gap should be eliminated before the end of this year," Ashworth said.

The faster GDP growth was led by a substantial increase in consumer spending, which was boosted by two rounds of stimulus checks.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits dropped to a new pandemic-era low in the week ended April 24th.

The report said initial jobless claims dipped to 553,000, a decrease of 13,000 from the previous week's revised level of 566,000.

Economists had expected jobless claims to inch up to 549,000 from the 547,000 originally reported for the previous week.

Jobless claims fell for the third straight week, once again sliding to their lowest level since hitting 256,000 in the week ended March 14, 2020.

Selling pressure waned over the course of the session, however, as the Federal Reserve has repeatedly indicated they plan to continue their asset purchases at the current pace for the foreseeable future despite signs of economic improvement.

Trading on Friday may be impacted by another batch of economic data, including reports on personal income and spending, consumer sentiment, and Chicago-area business activity.