Treasurys
U.S. Treasury debt prices fell on Thursday after data showed initial jobless claims in the world's largest economy dropped to their lowest in more than eight years, but losses may be limited by safe-haven buying given ongoing tensions in the Middle East and Ukraine.
Yields, which move inversely to bond prices, on benchmark U.S. 10-year notes and 30-year bonds rose to one-week highs after the data, with the 10-year climbing above a pivotal 2.50 percent.
"The lower-than-expected U.S. initial jobless claims has made people focus on the improving labor market situation and that has weighed on the Treasury market," said Ian Lyngen, senior government bond strategist, at CRT Capital in Stamford, Connecticut.
Data showed on Thursday that initial claims for state unemployment benefits declined 19,000 to a seasonally adjusted 284,000 for the week ended July 19. That was the lowest since February 2006 and confounded economists' expectations for a rise to 308,000.
In mid-morning trading, 10-year U.S. Treasurys were down 10/32 in price to yield 2.502 percent. The yield hit a peak of 2.518 percent, the highest since July 18.
The U.S. 30-year Treasury bond, meanwhile, was down 18/32 in price, pushing the yield up to 3.292 percent, after peaking at 3.308 percent, a one-week high. U.S. 30-year bond yields have recovered from Monday's levels, when they fell to their lowest since June 2013.
Yields, however, fell from their highs after data showed sales of new U.S. single-family homes fell sharply in June and the prior month's data was revised to show less robust growth. The Commerce Department said on Thursday sales dropped 8.1 percent, the largest decline since July 2013, to a seasonally adjusted annual rate of 406,000 units.
The current unrest in Ukraine and Gaza also remained a constant threat to yields.
Palestinians said residents of two southern villages were trapped by days of tank shelling, with medics unable to evacuate wounded. U.N. agencies said more than 140,000 people had been displaced. Hamas fired rockets at Tel Aviv and said its gunmen carried out a lethal ambush on Israeli soldiers in north Gaza.
In Ukraine, artillery fire echoed in the south and northwest of rebel-held Donetsk in the eastern part of the country on Thursday and one district near the city was without electricity as Ukrainian forces pressed a military campaign against pro-Russian separatists.
"The geopolitical situation should keep a cap on yield," CRT's Lyngen said. "If anything, that's preventing the market from selling off further."
—By Reuters