US bonds slip on housing jump, fewer jobless claims

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 and hurt by concern that Congress might not raise the $16.4 trillion federal borrowing limit, Treasury yields rose, moving inversely to prices.

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 14/32 in price to 97-26/32, the yields rising to 1.87 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 26/32 to 93-31/32, their yields rising to 3.06 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.

A weaker-than-forecast January business conditions index from the Federal Reserve Bank of Philadelphia had no lasting impact on Treasury prices.

"These regional surveys have been underperforming the (nationwide) Institute for Supply Management surveys," noted David Ader, head of government bond strategy at CRT Capital Group in Stamford, Connecticut.