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US Treasurys extend losses after supply

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U.S. Treasurys prices extended losses after the auction on Thursday. Bonds interrupted a four-session gaining streak earlier in the morning on the news of fewer new U.S. jobless claims.

The Treasury auctioned $29 billion in seven-year notes at a high yield of 2.058 percent. The bid-to-cover ratio, an indicator of demand, was 2.46. The auction was the third and final of the week. The Treasury sold two-year notes on Tuesday and five-year notes on Wednesday.

Benchmark 10-year Treasury notes were down 4/32, yielding 2.649 percent.

Thirty-year Treasury bonds were down 11/32, yielding 3.692 percent.

The number of Americans filing new claims for jobless benefits fell last week to a seasonally adjusted 305,000, a near six-year low, the Labor Department said on Thursday. The four-week average of new claims, which evens out weekly volatility, fell 7,000 to 308,000, the lowest level since June 2007.

The report was "obviously constructive for the labor market outlook as we head into next week's non-farm payrolls report," said Ian Lyngen, Treasury strategist at CRT Capital Group in Stamford, Connecticut.

The possibility that U.S. payroll growth might turn out to be stronger than forecast so far weighed on U.S. Treasurys.

"This level of claims is consistent with a 200,000 NFP print, compared with the 175,000 consensus," Lyngen said.

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