US Treasurys choppy as stocks give up gains

Bond traders at CME Group
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U.S. sovereign bond prices fell in choppy trading Thursday after the European Central Bank left interest rates unchanged and as U.S. stocks held on to gains.

The U.S. 10-year yield climbed to 2.0041 percent, after closing at 1.982 percent on Wednesday. Meanwhile, longer-dated 30-year bonds yields ticked higher to 2.7849 percent after finishing at 2.736 percent in the previous session.

Investors also digested remarks made by ECB President Mario Draghi, in which he said he expects rates to remain at current or lower levels for a long period of time.

Draghi also said that downside risks have risen once more, and that the central bank may need to reconsider its monetary policy stance at its next meeting.

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U.S. stocks rose on Wednesday, as the three major averages climbed more than 1 percent each before giving up most of those gains. U.S. oil prices also rose more than 3 percent during the session.

Interest rate futures now imply that around 30 percent of traders expect another Federal Reserve rate hike at the next policy meeting in March, down from 40 percent earlier this week according to CME's FedWatch data.

"The latest slump in commodity prices, the renewed market turmoil and the apparent slowdown in fourth-quarter GDP growth are all good reasons why the Fed might ultimately decide against raising interest rates for a second time at the mid-March FOMC meeting. But that meeting is still two months away and we doubt that the Fed will want to back itself into a corner at the upcoming FOMC meeting next week, by providing a strong steer on what might happen in March," said chief north American economist at Capital Economics, Paul Ashworth.

On the data front, investors digested weekly U.S. jobless claims, which rose to a six-month high of 293,000.