CORRECTED-TREASURIES-Prices dip on unexpected fall in jobless claims

Thu Jan 24, 2013 2:35pm EST

Related Topics

(Removes reference to benchmark yields touching over 3-week
lows)
    * U.S. weekly jobless claims unexpectedly fall to 5-year low
    * Yields start the day down on worries over U.S. spending
cuts

    By Chris Reese
    NEW YORK, Jan 24 (Reuters) - U.S. Treasury debt prices eased
on Thursday, paring early gains after data showing new claims
for unemployment benefits fell unexpectedly to a five-year low
in the latest week.
    The fall in jobless claims supported hopes of a recovery in
the labor market and undermined the safe-haven investment appeal
of U.S. government debt.
    "Claims are an important component of the index of leading
economic indicators and tell us where employment is going, and
these numbers imply that we may get a good employment number for
the month of January when it is released in early February,"
said Hugh Johnson, chief investment officer of Hugh Johnson
Advisors LLC in Albany, New York.
    Treasuries began the day trading higher in price as
investors sought safe havens due to concerns about the impact of
potential U.S. spending cuts and weak French data.
    A Republican plan to extend the U.S. Treasury's borrowing
authority will allow it to borrow money through mid-May,
temporarily easing default concerns. But after the plan's
approval on Wednesday in the House of Representatives, speaker
John Boehner said Republicans would take the next opportunity -
automatic spending cuts set for March 1 - to demand reforms from
President Barack Obama. 
    Benchmark 10 year Treasury notes were trading
3/32 lower in price to yield 1.84 percent, up from 1.82 percent
late Wednesday.
    Ahead of the release of the jobless claims data, yields
dipped to 1.81 percent. U.S. yields fell early in the session in
tandem with those of triple-A rated German Bunds after data
showed French business activity shrank in January to the lowest
level since March 2009. 
    Still to come in the Treasuries market on Thursday, the
Federal Reserve will buy $2.75 billion to $3.5 billion of U.S.
government debt maturing February 2020 through November 2022 as
part of its latest economic stimulus program.
    The Treasury will also auction $15 billion of 10-year
Treasury inflation-protected securities early in the afternoon.
    The Labor Department said on Thursday that initial claims
for state unemployment benefits fell 5,000 in the latest week to
a seasonally-adjusted 330,000, the lowest level since January
2008. Analysts polled by Reuters had expected claims to rise to
355,000 last week. 
   
 
    Thirty-year Treasury bonds were trading 9/32
lower in price to yield 3.04 percent, up from 3.01 percent late
Wednesday.

 (Additional reporting by Chuck Mikolajczak; Editing by Nick
Zieminski)
FILED UNDER: