Longer-dated US Treasury yields fell on Thursday after European Central Bank President Mario Draghi said there was no discussion at the ECB's latest policy meeting on possible changes to its 1 trillion-plus euro bond purchase program. Draghi's comments countered speculation the ECB may begin paring its monthly purchases of assets with its stimulus program possibly concluding as early as March 2017.
"Draghi was pretty emphatic about not talking about tapering," said Brian Daingerfield, macro strategist at RBS Securities in Stamford, Connecticut. "That was supportive for the overall market." In light, choppy trading, benchmark 10-year Treasury notes were unchanged in price to yield 1.752 percent, while the 30-year bond was up 8/32 in price, yielding 2.501 percent, which was down more than 1 basis point from Wednesday.
"The 1.75 percent level seems to be a magnet for 10-years where people feel comfortable," said Mike Lorizio, senior fixed income trader at Manulife Asset Management in Boston. Longer-dated yields rose briefly when Draghi, in reply to a reporter's question on whether extraordinary policy support could stay in place forever, said: "And the answer is, of course, no." Draghi said any discussion on ECB policy will likely take place at its December 8th meeting.
Data on US jobless claims and existing home sales released on Thursday supported the view of moderate US economic growth. First-time filings for unemployment benefits rose more than expected to 260,000 last week, but they remained below a level that is tied to a sturdy jobs market, while home resales grew 3.2 percent in September, stronger than analyst forecasts.
The mildly encouraging data supported expectations the Federal Reserve may raise interest rates at its December 13-14 meeting, traders said. US interest rates futures implied traders saw over a 70 percent chance of a rate hike in December, according to CME Group's FedWatch program. Shorter-dated yields were up 2 basis points on the day. On the supply front, the Treasury Department sold $5 billion in 30-year Treasury Inflation Protected Securities to sturdy investor demand, resulting in the lowest yield since February 2013, according to Treasury data.
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