U.S. Treasuries Drop as Jobless Claims Decline

Treasuries declined, with 10-year yields rising for a second day, as a report showed U.S. jobless claims unexpectedly fell to the lowest level in more than eight years, damping demand for the safest assets.

The benchmark 10-year yield climbed from almost the lowest since May as investors assess the Federal Reserve’s plans to raise interest rates next year. Reports indicated euro-area manufacturing and services grew while a gauge of Chinese factory activity rose to an 18-month high in July. The U.S sold $15 billion of 10-year Treasury Inflation Protected Securities at the lowest yield since May 2013.

“We’ve sold off a bit with better-than-expected claims data weighing on Treasuries,” said Ian Lyngen, a government-bond strategist at CRT Capital Group LLC in Stamford, Connecticut. “The market continues to point to higher yields, but we are solidly within the range for now. We won’t escape it without a material shift in the data that will alter people’s perception of the pace of Fed tightening.”

Bloomberg

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