Treasurys ease as jitters remain

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NEW YORK (CNNMoney.com) -- Treasurys eased Thursday as investors digested the latest readings on inflation, labor and manufacturing.

"The market is seeing mixed numbers and that's keeping it off balance," said Nick Kalivas, vice president of financial research at MF Global. However, he said "questions about the magnitude of economic recovery have put a bit of a floor in the market."

Treasurys have been range-bound recently as investors respond to mixed economic news and concerns about the future of U.S. monetary policy.

Thursday's data highlighted the cloudy outlook for the economy, which has shown signs of improvement but still faces a shaky recovery.

At the same time, concerns about when and how the Federal Reserve will eventually raise interest rates from historic lows near 0% have also weighed on the bond market.

While the central bank has said rates will remain exceptionally low for an extended period of time, many traders say recent comments from Fed officials suggest otherwise.

"The Fed might not be in position to go now, but when they do go they may go fast," Kalivas said.

Economy. The Labor Department said initial claims for state unemployment benefits fell 10,000 to a seasonally adjusted 514,000 in the week ended Oct. 10. Economists surveyed by Briefing.com had expected initial claims to rise to 520,000.

The Consumer Price Index, the government's key inflation measure, rose 0.2% in September, down from the 0.4% rise posted in August.

Excluding volatile food and energy prices, the so-called core consumer prices rose 0.2% in September. Economists had forecast a 0.1% increase.

Treasurys are highly sensitive to changes in the inflation rate because rising prices can erode the value of fixed income assets.

Factory activity in the Mid-Atlantic region grew less than expected in October, according to the Philadelphia Federal Reserve Bank's monthly survey. That report contrasted with an earlier reading on manufacturing activity in New York.

The New York Fed said its "Empire State" gauge of manufacturing jumped unexpectedly this month to its highest in five years on surging new orders, shipments and employment in the sector.

Bond prices. The benchmark 10-year note was down 14/32 to 101 9/32 and its yield rose to 3.46% from 3.41% late Wednesday. Bond prices and yields move in opposite directions.

The 2-year note fell 2/32 to 100 3/32 with a yield of 0.94%.

The 30-year bond lost 21/32 to 103 8/32. Its yield was 4.30%.

The yield on the 3-month bill was 0.07%.