Long-Term Treasuries Fall Despite Weak Initial Jobless Claims Data

By Yi Ping Ho ,

U.S. Treasuries, particularly the longer-dated securities, dropped in recent activity, despite the latest weekly

initial jobless claims numbers that showed continued sluggishness in the job market.

On the short end of the market, the two-year note, which climbed this morning after the latest jobless data and monthly retail sales reports, was lately unchanged at 100 7/32, with a yield, which moves in the opposite direction of the price, of 4.129%. The longer-dated securities were weak, with the 10-year benchmark note down 8/32 to 97 24/32, yielding 5.299%. The 30-year Treasury bond, also known as the long bond, lost 25/32 to 95 8/32, moving the yield up to 5.707%.

Bond market observers attributed the selloff in the long end of the market to profit-taking and the consolidation of recent gains. "We went a long way up very quickly," said Maryanne Hurley, vice president of Treasuries at

D.A. Davidson

. "With no economic data out tomorrow, I feel that people are booking their profits. The two-year note was up earlier, consistent with the economic data out this morning, and they're holding pretty close to unchanged."

Weekly jobless claims reached their highest level since September 1992 in the week ended June 2, rising 13,000 to 432,000. Ongoing claims were at their largest weekly increase since 1992, soaring 209,000 to 2.99 million, the highest level since November 1992. May same-store sales mostly fell in May.

Sears

(S) - Get Report

saw sales fall 3.3%, and at

J.C. Penney

(JCP) - Get Report

sales fell 1.2%. Clothing retailers

Gap

(GPS) - Get Report

and

Limited

(LTD)

also reported a decline in same-store sales for May.

"I'm concerned about the consumer just because the savings rate is so low, and the tax cuts aren't going to kick in until later this year," said Hurley, noting that next week's

retail sales report for May will be an important piece of data on the health of consumer spending in the U.S. Hurley said the latest

consumer price index and

producer price index reports due next week are less important because

Alan Greenspan has been "downplaying the importance in the inflation numbers."

The market has been watching every bit of data as an indication of what the Fed will do at its next meeting on June 26-27. The central bank has so far cut interest rates by 250 basis points this year to 4%, and the market expects another 25 basis point cut later this month.

Loading ...