US government debt prices rose on Thursday with benchmark yields hovering at two-week lows, after data on jobless claims undercut optimism that the US jobs market is gaining traction. Nagging jitters about the euro zone's fiscal woes and the perception the Federal Reserve might consider more stimulus to help the US economy also revived bids ahead of a $29 billion auction of seven-year notes.
The US Labour Department said new jobless claims fell to a fresh four-year low last week. But the report also contained revisions for claims data from 2007 based on updated seasonal adjustment calculations, including a significant upward revision for the previous week's number. This resulted in speculation that recent improvements in jobless claims may not have been as rosy as first thought.
"So you haven't seen as much improvement on the firing side as you had previously thought," Tom Porcelli, chief US economist at RBC Capital Markets in New York, said of the jobless claims revisions. Earlier this week Fed Chairman Ben Bernanke made comments, including in a television interview, that the US economy remains vulnerable despite recent encouraging data on job growth. However, he stopped short of signalling the US central bank might soon embark on a third round of large-scale bond purchasing, known as QE3, to boost sluggish economic growth.
"He does seem to express a more pessimistic tilt," John Donaldson, director of fixed income at Haverford Investments at Radnor, Pennsylvania, which manages $6.5 billion in assets, said of Bernanke's remarks on the economy this week. Bernanke noted that the current unemployment rate, currently at 8.3 percent, is worrisome given the outlook of tepid growth.
The benchmark 10-year Treasury note was 11/32 higher in price with its yield at 2.16 percent, down nearly 3 basis points late on Wednesday. The 30-year bond last traded up 18/32, yielding 3.28 percent, down about 3 basis points from Wednesday.
Three top US central bank officials will make public appearances on Thursday, including Atlanta Fed president Dennis Lockhart and Richmond Fed chief Jeffrey Lacker who are voting members of the Federal Open Market Committee this year. Prior to these Fed officials' engagements, the Fed plans to sell $8.00 billion to $8.75 billion in Treasuries due from June 2014 to March 2015.
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