MW: Treasurys fall after jobless claims unexpectedly improve
NEW YORK (MarketWatch) -- Treasury prices extended losses on Thursday, pushing yields up for a third day, after a report showed the number of Americans filing claims for initial unemployment benefits unexpectedly declined, spurring hopes that the job market continued to improve, supporting the economic recovery.
Yields on 10-year notes (UST10Y 3.39, +0.08, +2.45%) rose 7 basis points to 3.39%. Yields move in the opposite direction as prices and a basis point is one one-hundredth of a percent.
Two-year note yields (UST2YR 0.75, +0.04, +4.92%) increased 3 basis points to 0.75%, rising further from the lowest in almost a year.
The Labor Department said 457,000 Americans filed initial claims for unemployment benefits in the latest week, the fewest since September 2008. Economists surveyed by MarketWatch had anticipated initial claims would increase to 480,000. See story on jobless claims.
That low of a figure "may be pointing to a cessation of job losses," Tony Crescenzi, portfolio manager at Pacific Investment Management Co., wrote in an email. "Any recovery in the labor market would initially be viewed as positive for risk assets."
The initial claims report come a day before the government's closely-watched monthly payrolls report. Economists expect the jobless rate to remain at a 26-year high of 10.2% in November, with 100,000 nonfarm payrolls lost. It would be the fewest jobs lost since January 2008.
A separate report showed third-quarter productivity rose 8.1%, less than expected. See more on productivity.
Treasurys had been under pressure before the data as equities rallied on news that Bank of America (BAC 16.45, +0.80, +5.11%) would repay its bailout loan. See more on Bank of America's TARP loan.
Still to come is the Institute for Supply Management's report on the services sector at 10 a.m. eastern time and the Treasury Department's announcement at 11 a.m. of how much in debt it will sell next week.
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Wrightson ICAP, a research firm specializing in government debt, expects the government to sell $40 billion in 3-year notes (UST3YR 1.22, +0.06, +4.83%) , $21 billion in 10-year debt and $13 billion in 30-year bonds (UST30Y 4.32, +0.07, +1.67%) .
The amount of 3-year securities is the same amount as was auctioned last month. The amounts of 10- and 30-year debt are smaller because they are reopenings of the November sales, meaning the debt to be sold will carry the same coupon and maturity as the original issues.
"There is a chance that Treasury leaves all of the issue sizes unchanged because they're very close to debt ceiling limits and Treasury may be concerned about year-end market liquidity," said strategists at RBS Securities.
