Treasury yields move higher

Treasury yields rise ahead of Friday's US gross domestic product report, which is expected to show growth of 2% in the first quarter, a strong outcome after a volatile start to the year in financial markets. American GDP data for the first three months of 2019 could strengthen the case that while the current period of global expansion is in its late stages, some of the biggest contributors have yet to run out of steam. A Reuters poll of economists estimated 2% growth.
The tick up in yields retraced some of Wednesday's significant price gains on a gloomy outlook for global growth, as investor focus turned to the US economy. Data reported on Thursday morning was mixed, with a rise in jobless claims and a strong headline number in capital goods orders. It nevertheless lifted yields, analysts said, as it affirmed the growth estimate or more.
"Following that data, our tracking estimate for GDP was confirmed at 2.5%, which is certainly above where most core estimates would have come in at the beginning of Q1. So the growth outlook is a bit better and that has caused yields to move up from the beginning of the year and that continues today," said Michael Pond, head of global inflation-linked research at Barclays.
Orders for non-defense capital goods excluding aircraft surged 1.3 percent in March, the most in eight months, the Commerce Department reported on Thursday. But a drop in shipments suggested business spending on equipment slowed in the first quarter.
Also reported on Thursday was the number of Americans filing applications for unemployment benefits, which last week increased by the most in 19 months. The underlying trend, however, continued to point to labor market strength.
"It was difficult to read a whole lot into (the economic data). Jobless claims jumped up but that was because of a supermarket-worker strike. And around the holidays, it's hard to get the seasonal adjustments right," said Mike Lorizio, senior fixed income trader at Manulife Asset Management.
Also on Thursday, the US Treasury Department sold $32 billion in seven-year government notes to average demand, with primary dealers taking the largest percentage of the offering since October 2018.
The 10-year yield was last up 1 basis points to 2.533%. At either end of the curve, the two-year note yield was up 1 basis point to 2.330% and the 30-year bond yield was up less than half a basis point to 2.944%.