Treasuries Give Back Ground Following Yesterday's Surge

Treasuries showed a notable move to the downside during trading on Wednesday, giving back ground after skyrocketing in the previous session.

Bond prices moved sharply lower in morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 9.4 basis points to 4.535 percent.

The pullback by treasuries may partly have reflected profit taking after the ten-year yield plummeted by 19.1 basis points to a nearly two-month closing low on Tuesday.

A report from the Commerce Department showing U.S. retail sales edged down by less than expected in the month of October may also have reduced the appeal of bonds.

The Commerce Department said retail sales slipped by 0.1 percent in October after jumping by an upwardly revised 0.9 percent in September.

Economists had expected retail sales to dip by 0.3 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding a decrease in sales by motor vehicle and parts dealers, retail sales inched up by 0.1 percent in October after climbing by 0.8 percent in September. Ex-auto sales were expected to come in unchanged.

The Federal Reserve Bank of New York also released a report showing a significant turnaround in regional manufacturing activity in the month of November.

The New York Fed said its general business conditions index surged to a positive 9.1 in November from a negative 4.6 in October, with a positive reading indicating growth. Economists had expected the index to rise to a negative 2.8.

Meanwhile, bond traders largely shrugged off a Labor Department report showing an unexpected decrease in U.S. producer prices in the month of October.

The Labor Department said its producer price index fell by 0.5 percent in October after rising by a revised 0.4 percent in September.

Producer prices were expected to inch up by 0.1 percent compared to the 0.5 percent increase originally reported for the previous month.

The report also said the annual rate of producer price growth slowed to 1.3 percent in October from 2.2 percent in September. Economists had expected the pace of price growth to slow to 1.9 percent.

Another batch of U.S. economic data is scheduled to be released on Thursday, including reports on weekly jobless claims, import and export prices, industrial production and homebuilder confidence.

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