NEW YORK: Longer-dated US Treasuries fared better than shorter-dated issues on Thursday after data showed fewer Americans filed for unemployment benefits last week, further supporting the view that the Federal Reserve will raise interest rates in December.
The curve-flattening move is based on the view that after the US central bank ends its near-zero rate policy, shorter-term Treasury yields would rise faster than longer-dated ones.
The yield gap between the US five-year note and the 30-year bond contracted to its tightest level since August during early trading.
Appetite for longer-dated bonds could stoke bidding at the $13 billion auction of 10-year Treasury Inflation-Protected Securities at 1 p.m. (1800 GMT), analysts said.
"This morning's data simply confirmed that the economic landscape is healthy enough for the Fed to continue with its desired timing for liftoff, which for now the market is expecting to be December," said Ian Lyngen, senior government bond strategist at CRT Capital in Stamford, Connecticut.
Thursday's data came a day after the release of minutes from the Fed's October 27-28 meeting signaled a likely glacial rise in interest rates once liftoff begins.
Minutes from the Federal Open Market Committee, the Fed's policy-setting group, further reinforced the view that a December rate increase is likely if the economy continues to improve and markets remain stable.
The 30-year bond was up 26/32 in price to yield 3.000 percent, down 4 basis points from late on Wednesday, and the five-year note was up 1/32 in price to yield 1.667 percent, down 1 basis point on the day.
Benchmark 10-year Treasuries were up 6/32 in price for a yield of 2.245 percent, down from 2.268 percent late Wednesday. Interest rates futures implied traders clung to a growing consensus view of a December rate hike, followed by a slow path for subsequent rises.