NEW YORK: US Treasury debt prices fell on Thursday, weakened by stronger economic data that favored riskier assets over safe-haven debt.
After falling for four straight sessions to their lowest levels in two weeks, hurt by concern that Congress might not raise the $16.4 trillion federal borrowing limit, Treasury yields rose.
Government data showing the number of Americans filing new claims for unemployment benefits fell to a five-year low last week and that residential construction surged in December boosted stocks and weakened bonds.
"The jobless claims figures were better than expected and housing starts were very strong. That pushed the Treasury market off its recent downward trend in yields," said Jon Mackay, senior fixed-income strategist for Morgan Stanley Wealth Management.
Benchmark 10-year notes fell 16/32 in price to 97-24/32, the yield rising to 1.88 percent from 1.82 percent on Wednesday.
"The 10-year yield is close to a 50 percent retracement level of the 2012 range, which comes in at 1.89 percent," said Tom Di Galoma, managing director at Navigate Advisors LLC in Stamford, Connecticut. "Ten-years should hold that level short-term," he said.
Thirty-year bonds, meanwhile, fell 1-1/32 to 93-24/32, their yields rising to 3.07 percent from 3.02 percent late on Wednesday.
The 10-year yield has moved between 1.75 percent to 1.97 percent since the start of the year on the "push and pull of economic data, as well as this looming debt ceiling, sequestration, continuing resolution process," Mackay said.
But he said during the "fiscal cliff" negotiation, markets had done a "pretty good job of distinguishing between a somewhat messy process" and the actual result.
"We're likely to see the same thing with the debt ceiling, sequestration and the continuing resolution process," he said.
As part of its latest efforts to stimulate the economy and employment, the Federal Reserve bought $3.357 billion of Treasuries maturing February 2020 through November 2022, the second of four purchase operations in this sector scheduled for January, said Stone & McCarthy Research Associates economic analyst Andrew Brodsky.
The Fed will hold a total of 18 Treasury purchase operations each month, with the long end of the curve targeted most often, with eight operations each month, he said.
"However, the largest volume of purchases will take place in the seven- to 10-year sector," Brodsky said. "The Fed estimates that 29 percent of all purchases will occur in the seven- to 10-year sector, followed by 27 percent of the purchases in the 20- to 30-year sector."
A weaker-than-forecast January business conditions index from the Federal Reserve Bank of Philadelphia had no significant impact on Treasury prices.
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