Treasurys Near Flat Amid Mixed Economic Data

By Gunjan Banerji Features Dow Jones Newswires

U.S. government bonds were little changed Thursday amid mixed economic data.

Continue Reading Below

In recent trading, the yield on the benchmark 10-year Treasury note was 2.222%, according to Tradeweb, compared with 2.224% on Wednesday. Yields fall when bond prices rise.

Treasurys briefly came under modest pressure after expected data on jobless claims, a proxy for layoffs in the U.S., came in slightly better than expected.

In a sign of health for the U.S. labor market, the number of Americans filing for unemployment benefits dropped last week by 12,000 to a seasonally adjusted 232,000 in the week ending Aug. 12, the lowest reading since February. Economists surveyed by The Wall Street Journal had expected 240,000 new claims.

Manufacturing activity across mid-Atlantic states slowed in August, but continued to show growth, according to the Federal Reserve Bank of Philadelphia's monthly report on business activity.

On Wednesday, minutes from a July Fed meeting showed a split in how officials preferred to address wilting inflation figures. Some officials wanted to be more patient about raising rates, while others showed concern about a spell of inflation that might be unmanageable.

Continue Reading Below

The disagreement rekindled doubts about whether the central bank would raise interest rates again this year and helped spur a rebound in Treasury bonds Wednesday after two days of declines.

Inflation is a threat to Treasury bond prices because it erodes the purchasing power of government bonds' fixed payments.

"There is growing confusion about the timing of when inflation's going to finally pick up," said Mark Heppenstall, chief investment officer of Penn Mutual Asset Management, adding that Treasury trading has been "incredibly rangebound."

Low volatility has blanketed the Treasury market. Yields on 10-year Treasury notes have been trading in the tightest range since a 90-day period in 1972, according to WSJ Market Data Group.

The July Fed minutes also revealed that some Fed officials see a declining possibility that the Republican-held Congress and White House administration will achieve the ambitious goals to overhaul taxes and spur infrastructure spending.

Two of President Donald Trump's business councils disbanded Wednesday, and traders remained on edge for more fallout from his controversial response to recent violence in Charlottesville, Va.

In an otherwise quiet trading session, Treasurys briefly surged Thursday morning as unconfirmed rumors swirled that Gary Cohn, Mr. Trump's National Economic Council director, was resigning from his position. The yield on the benchmark 10-year U.S. Treasury note fell as low as 2.210% before rebounding.

Despite the rapid recovery, investors and analysts said the response showed traders were closely following events at the White House, which could spill over to financial markets.

"I don't see the market getting too far carried away" but any uncertainty about the Trump administration "is going to create a flight to safety," said Mary Ann Hurley, vice president of fixed income trading in Seattle at D.A. Davidson & Co.

Sam Goldfarb contributed to this article

Write to Gunjan Banerji at Gunjan.Banerji@wsj.com

(END) Dow Jones Newswires

August 17, 2017 11:37 ET (15:37 GMT)