Following the strong upward move seen in the previous session, treasuries saw some further upside during trading on Thursday.

Bond prices moved notably higher in morning trading but gave back some ground in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 2.2 basis points to 2.981 percent.

Treasuries initially benefited from geopolitical concerns following news President Donald Trump has called off the historic summit with North Korean leader Kim Jong Un.

Trump sent a letter to Kim expressing his belief it would be inappropriate to hold the planned meeting in Singapore on June 12th.

The president attributed the decision to call off the meeting to North Korea displaying "tremendous anger and open hostility."

The release of the letter came after North Korean vice foreign minister Choe Son-hui raised the possibility of canceling the meeting following what she called "ignorant and stupid" comments by Vice President Mike Pence.

Traders also looked to safety of bonds following the release of some disappointing economic data, including a Labor Department report showing an unexpected increase in initial jobless claims in the week ended May 19th.

The report said initial jobless claims rose to 234,000, an increase of 11,000 from the previous week's revised level of 223,000.

The increase came as a surprise to economists, who had expected jobless claims to edge down to 220,000 from the 222,000 originally reported for the previous week.

A separate report from the National Association of Realtors showed a much bigger than expected pullback in existing home sales in the month of April.

Existing home sales tumbled by 2.5 percent to an annual rate of 5.46 million in April after climbing by 1.1 percent to a rate of 5.60 million in March. Economists had expected existing home sales to edge down by 0.2 percent.

NAR chief economist Lawrence Yun attributed the slump in existing home sales in April to staggeringly low inventory levels

However, treasuries gave back some ground in afternoon trading as stocks on Wall Street once again attempted to recover from an early move to the downside.

Traders largely shrugged off the results of the Treasury Department's auction of $30 billion worth of seven-year notes, which attracted above average demand.

The seven-year note auction drew a high yield of 2.930 percent and a bid-to-cover ratio of 2.62, while the ten previous seven-year note auctions had an average bid-to-cover ratio of 2.51.

The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.

Today's seven-year note auction came after the Treasury sold $33 billion worth of two-year notes on Tuesday and $36 billion worth of five-year notes on Wednesday.

Developments overseas may impact trading on Friday, although reports on durable goods orders and consumer sentiment are also likely to attract attention.

Overall trading activity may be somewhat subdued, however, as some traders may look to get a head start on the long Memorial Day weekend.

by P2PNews Staff Writer

Market AnalysisBB

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