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Treasury yields trade higher after Trump hints at tax announcement, and 30-year bond sale

Bond traders at CME Group
Getty Images


U.S. government debt prices fell on Thursday following remarks made by President Donald Trump about taxes.

In a meeting with U.S. airline executives, Trump said "we're going to announce something I would say over the next two or three weeks that will be phenomenal in terms of tax."

"That added to the bearish price action that was already in place.. .it was more contributing to the negative tone that was in place. His comments were worth about two basis points," said Ian Lyngen, head of US rates strategy at BMO. "People were talking about it," he said, but added that it provided no detail and therefore not much clarity for the markets.

The yield on the benchmark 10-year Treasury note extended gains after Trump's remarks, trading at 2.398 percent, while the yield on the 30-year Treasury bond was also higher at 3.013 percent. Yields move inversely to prices.

The Treasury Department auctioned $15 billion of 30-year bonds at a high yield of 3.005 percent.

Indirect bidders, which include major central banks, were awarded 66.2 percent. Direct bidders, which includes domestic money managers, bought 4.9 percent. The bid-to-cover was 2.25

Symbol
Yield
 
Change
%Change
US 3-MO
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US 1-YR
---
US 2-YR
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US 5-YR
---
US 10-YR
---
US 30-YR
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On the data front, weekly jobless claims fell by 12,000 to 234,000, below a consensus estimate of 250,000. Wholesale trade data for December showed a 1 percent increase on inventories.

Meanwhile, St. Louis Federal Reserve President James Bullard said U.S. interest rates can remain low throughout at least 2017, with no clear sense yet of whether the new Trump
administration's policies will touch off higher inflation or growth.

In oil markets Thursday, Brent crude was around $55.63 a barrel, up 0.93 percent, while U.S. crude was at $53.05 a barrel, up 1.36 percent.

Overseas, France's borrowing costs fell back below 1 percent for the first time in two weeks on Thursday, as fears about the political risks facing the euro zone's second biggest economy gave way to a sense that recent selling of French debt had gone too far.

Investor nerves jarred by the strong showing of France's far-right leader Marine Le Pen's ahead of this spring's presidential election helped send the spread between French bond yields over German ones to multi-year highs this week.

As French bonds recovered ground on Thursday so did other euro zone bonds that have suffered from heightened political risks and worries about an unwinding of ECB stimulus.

—CNBC's Patti Domm and Reuters contributed to this report.