US Treasury prices fell on Thursday as dealers prepared for new supply next week, while there was little effect from economic data, which came within expectations and painted a picture of a gradually improving economy. The Treasury said it will sell $35 billion in two-year notes on Monday, $35 billion in five-year notes on Tuesday and $29 billion of seven-year notes on Wednesday.
The debt may need to be sold at higher yields than otherwise due to the timing of the auctions, which will occur in thin trading between the Christmas and New Year holidays, traders said. "It's a pretty large amount of supply in what will be a relatively thin week and you would think a lot of people have already squared their books," said Lou Brien, market strategist at DRW Trading Group in Chicago. "Just the timing of it might make it difficult to swallow."
The benchmark 10-year note was last down 9/32 to yield 3.39 percent, compared with 3.35 percent late on Wednesday. Five-year notes fell 8/32 to yield 2.07 percent and 30-year bonds dropped 3/32 to yield of 4.46 percent. Treasuries could be easily swayed by low liquidity on Thursday, however, making it difficult to divine any meaning from price moves, said Brien. A slew of data releases failed to cause any significant market reaction, as most releases came within expectations.
"I don't think it means a great a deal to the market because it was all just slightly better than expected," said Jim Vogel, interest rate strategist at FTN Financial in Memphis, Tennessee Data showed first-time claims for US jobless benefits barely budged last week, consumer spending rose for a fifth straight month in November and incomes rose slightly more than expected.
New orders for US manufactured goods, excluding the volatile transportation sector, also rose more than expected in November to record their largest gain in eight months. Data also showed that confidence among US consumers rose in December to its highest level since June, on improved job prospects and larger discounts from retailers, and that sales of new single-family homes rose in November but to a lower-than-expected rate. Meanwhile investors seeking to sell long positions also remains a headwind to potential rallies.