Treasurys gain on sliding stocks
Government debt prices move higher after a selloff on Wall Street. Treasury announces a $118 billion auction.
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| Click chart to see current prices and yields. |
NEW YORK (Reuters) -- U.S. Treasury debt prices moved higher Thursday, as a selloff on Wall Street fueled a safety bid for bonds, reviving their recent winning streak.
The 30-year bond was up a full point with the major U.S. stock indexes down more than 1.0% in midday trading.
Bond investors also digested the U.S. Treasury Department's announcement of next week's auctions and the weekly U.S. jobless claims which showed only slow improvement in the labor market.
The U.S. Treasury said it would sell $118 billion of two-year, five-year and seven-year notes next week, about what analysts were expecting.
The large amount of debt set to be auctioned next week added to questions about when demand for Treasurys will begin to cool, but did not offset bullish factors for bonds such as sluggish labor market improvement.
"Treasurys are benefiting from a lot of positive factors. The supply announcement did not change that equation. I think it's more a reaction to the weakness in equities. This is still a lot of supply," said Jim DeMasi, chief fixed income strategist at Stifel Nicolaus & Co. in Baltimore.
U.S. claims for jobless aid was little changed in the latest week ended Nov. 14 at 505,000, though the four-week average declined to its lowest in nearly a year.
"The employment picture has not improved much with the number still at 500,000," said Larry Milstein, head of government and agency trading, R.W. Pressprich & Co. in New York. "We need to see that number come down substantially to show that things are improving."
In other U.S. economic data reported on Thursday, manufacturing activity in the Mid-Atlantic region expanded, with the Philadelphia Federal Reserve Bank's latest business index rising to 16.7 for the month, compared with 11.5 in October. Analysts had expected a reading of 12.0.
"This factory story is not an unusual situation at a turning point, particularly after a cycle like this where production was gutted so dramatically, and probably too much," said Bob DiClemente, the chief U.S. economist for Citigroup in New York. "You're getting this correction within the recovery simply to sort of recalibrate. I don't think the optimists can jump on this number too much."
Without a dramatic acceleration in the pace of economic recovery, investors seem hesitant to alter their positions ahead of the year-end.
"We are coming into year-end so people are looking for a place to have some safety," Milstein said. "That should keep a bid for Treasuries. They want to lock in the gains they earned."
The benchmark 10-year Treasury note's price, which moves inversely to its yield, was last up 13/32 for a yield of 3.32%.
The 30-year Treasury note's price, was up 33/32 with a yield of 4.24%. 
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