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Treasurys fall as US auctions $64B of new federal debt

U.S. Treasurys fell on Thursday after the government auctioned $64 billion in new debt .

The Treasury Department auctioned $29 billion in seven-year notes at a high yield of 1.590 percent. The bid-to-cover ratio, an indicator of demand, was 2.50, versus a recent average of 2.53.

The 10-year note was down 11/32 to lift its yield to 1.76 percent. Other maturities were also mostly off, while the seven-year note fell 7/32 in price to yield 1.56 percent.

Earlier, the Treasury sold $35 billion in five-year notes at 1.288 percent, the lowest yield since May 2013. The bid-to-cover ratio on that offering was higher than December's 2.39.

After three days of price increases that dropped the 30-year bond's yield to a record low on Wednesday, the 30-year was last off 13/32 in price to yield 2.31 percent after dipping to a record low of 2.273 percent on Wednesday.

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
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US 2-YR
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US 5-YR
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US 10-YR
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US 30-YR
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Bond losses increased after the government reported that the number of Americans filing new claims for unemployment benefits tumbled last week to its lowest level in nearly 15 years.

Initial claims for state unemployment benefits dropped 43,000 to a seasonally adjusted 265,000 for the week ended Jan. 24, the lowest since April 2000, the Labor Department said on Thursday. It was the biggest weekly decline since November 2012.

"The labor market looks like its up and running and healthy despite some of the international developments we've seen," said Jake Lowery, portfolio manager at Voya Investment Management in Atlanta. "There's less bid for safe-haven assets in a good economic environment and more chance the Fed can hike (interest rates) sometime this year."

On Wednesday, the Federal Reserve maintained an upbeat assessment of the job market, saying a range of labor indicators suggested that slack continued to diminish.

Demand for Treasurys, especially long-dated issues, has been especially strong among non-U.S. investors attracted by America's relatively high interest rates and economic prospects generally brighter than other major economies.

Some debt investors were taking profits from the Treasuries rally and others were selling current holdings to make room for new debt from five-year note and seven-year note auctions scheduled for Thursday, Lowery said.

"Prices have not moved more severely in the five-year and seven-year than in other portions of the curve, and that indicates the auctions should not be a major difficulty for the market," Lowery said.