NEW YORK: US Treasury debt prices rose o n T hursday after a fall in manufacturing in China and the euro zone's two largest economies raised demand for safe-haven assets and hurt stocks on worries global growth was stumbling.
Price gains were tempered, however, and the benchmark 10-year note yield held a bit above the 200-day moving average, after data showing new US claims for unemployment benefits fell to a four-year low last week.
Treasury yields recently rose to multimonth highs on signs of a stronger recovery in the United States. So price gains could be limited given expectations a better US economic picture will erode the value of government debt.
"Treasuries are benefiting from the reports of slower growth in other parts of the world," said David Coard, head of fixed-income sales and trading at The Williams Capital Group in New York, adding "they are also still benefiting from a certain amount of bargain hunting" following last week's price plunge.
Benchmark 10-year Treasury notes on Thursday were trading 12/32 higher in price to yield 2.26 percent, down from 2.3 percent late Wednesday, while 30-year bonds were trading 19/32 higher to yield 3.35 percent from 3.39 percent.
Benchmark yields dipped to as low as 2.24 percent, just above their 200-day moving average at 2.23 percent.
The yield broke above the 200-day moving average last week, when it added more than 25 basis points. Whenever a break of a key level is sustained, this could signal a new trend, technical analysts say.
Prices rose early on Thursday after the HSBC flash purchasing managers index showed China's manufacturing sector activity contracted in March for a fifth successive month, with the overall rate of contraction accelerating and new orders sinking to a four-month low.
Early buying was also driven by higher German and UK government bonds following data showing the euro zone economy shrank more than expected in March, hit by a sharp fall in French and German factory activity. Also, British retail sales dropped more than forecast in February.
In the US, the Labor Department later reported initial claims for state unemployment benefits fell to a seasonally adjusted 348,000 last week, the lowest level since February 2008. Economists polled by Reuters had forecast claims rising to 354,000 last week.
"The jobless claims trend suggests US growth is continuing and that the Federal Reserve has less reason to initiate any new stimulus," said Brian Jacobsen, chief portfolio strategist at Wells Fargo Funds Management in Menomonee Falls, Wisconsin.
As part of its latest stimulus plan, nicknamed "Operation Twist," the Fed on Thursday bought $2.008 billion of Treasuries maturing August 2022 through May 2030. Under the program the central bank is extending the maturity of its Treasury holdings in a bid to lower longer-dated interest rates like those on mortgages.
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