US bonds fall

US Treasury debt prices fell on Thursday in an abbreviated session as a powerful rally in stocks and some rising expectations of economic stabilisation hurt the safe-haven appeal of government bonds. Wall Street received earnings-related news that assuaged some concerns over the troubled US banking sector, benefiting riskier assets such as stocks at the expense of more conservative investments like Treasuries.
The day began on a bit of a bearish note for Treasuries after weekly jobless claims that were not as dire as expected. "Yields still ended higher on the day, as participants continue to respond to faint stirrings of economic stabilisation and financial system repair," said Chris Ahrens, strategist with UBS in Stamford, Connecticut.
Benchmark 10-year Treasury notes traded 17/32 lower in price for a yield of 2.93 percent, up from 2.86 percent late on Wednesday, while the two-year not traded 1/32 lower for a yield of 0.96 percent from 0.94 percent. The number of US workers filing new claims for jobless benefits contracted by more than expected last week, a rare bit of good news for the beleaguered job market, though a record high in continued claims tempered economic optimism.
The market cut the worst of its losses on Thursday after relatively decent demand at an auction of $18 billion worth of 10-year US Treasury notes. "All in all, I think the auction went well," said Carl Lantz, US interest rate strategist at Credit Suisse in New York. "The market has firmed up. I think people are happy with how the auction went." The auction matched last months record size for a 10-year reopening sale.
The Treasuries market closed early on Thursday ahead of the Good Friday holiday when US financial markets are closed. The early close had led to some worries that trading would be thin around the time of the auction, though this did not appear to hurt the sale. Elsewhere on the Treasury yield curve, the 30-year bond traded 1-11/32 lower in price for a yield of 3.75 percent from 3.67 percent late on Wednesday, while five-year notes were 9/32 lower for a yield of 1.90 percent from 1.84 percent.