Treasurys edge lower after mixed US data; 30-year bond gains

CNBC with Reuters


U.S. Treasury debt prices turned down on Thursday, with investors driving some shorter-maturity yields to highs not seen since 2011 after the Federal Reserve on Wednesday raised forecasts for some interest rates.

The Philadelphia Federal Reserve Bank said its business activity index fell to 22.5 in September, down from August's reading of 28.0, which had been the best reading for the index since March 2011.

Earlier, initial claims for state unemployment benefits dropped 36,000 to a seasonally adjusted 280,000 for the week ended Sept.13, its was the lowest level since July, according to the Labor Department.

Meanwhile, a separate report showed groundbreaking on new homes dropped 14.4 percent to a seasonally adjusted annual 956,000-unit pace in August, versus expectations of a 1.04-million unit rate, the Commerce Department said.

Yields on benchmark 10-year notes—used to calculate mortgage rates and other consumer loans—rose to 2.63 percent—little changed from Wednesday's close.

Thirty-year bond yields were last down to 3.36 percent, while short-maturity debt was mostly flat to lower.

Read MoreCNBC explains: Yield curves

This came as investors cheered the Federal Reserve's decision to restate its accommodative policy stance on Thursday. Fed Chair Janet Yellen said interest rates would not be hiked until a "considerable time" after quantitative easing ended.

"Language around economic activity was practically identical to the July statement," Evan Lucas a market strategist at IG Markets, said in a research note.

However, the Fed did project a faster pace of hikes that previously suggested. Rates are now seen at around 1.375 percent by the end of 2015, versus the 1.125 percent forecast in June.

On Thursday, Yellen will speak on consumer finance at an event in Washington. Dallas Fed President Richard Fisher speech at a separate event might shed light on his hawkish case for near-term policy action.

In the markets, the Treasury will sell 10-year Treasury Inflation-Protected Securities (TIPS), while the Fed is scheduled to purchase 10-17-year notes.

—By CNBC with Reuters