Concerns On U.S. Economy Boost Buying Of Treasuries

Treasuries gained Wednesday, sending 10-year yields to a one-month low.

Concerns about the U.S. economic recovery grew as jobless claims rose, business-equipment orders fell and home sales were less than forecast.

The benchmark 10-year note rallied for a fifth day, the longest stretch in more than a month. Its yield premium over Group of Seven peers was almost the biggest in two months, attracting global investors. The yield fell one basis point to 2.25% at 4:05 p.m. New York time.

Intraday, the yield reached 2.23%, the lowest since Oct. 23.

The U.S. sold $ 29 billion of seven-year debt to above-average demand, drawing the lowest yield since October 2013.

“This gravitational pull of lower global rates is without a doubt the dominant theme right now,” said William O’Donnell, head U.S. government bond strategist at Royal Bank of Scotland Group Plc’s RBS Securities unit in Stamford, Conn.

Volume in Treasuries was quiet.

Indirect bidders, a category of investors that includes foreign central banks, purchased 50% of the notes, the most since August 2011.

The auction took place at 11:30 a.m. in New York, 90 minutes earlier than usual. Treasuries are closed worldwide Thursday in observance of the U.S. Thanksgiving Day holiday, according to the Securities Industry and Financial Markets Association’s website. The group recommends an early close on Nov. 28 of 2 p.m. New York time.

Wednesday’s economic data followed a report Tuesday that showed U.S. gross domestic product unexpectedly expanded 3.9% in the third quarter, more than previously estimated. With the 4.6% increase in the second quarter, it marked the biggest back-to-back advance since late 2003.

Treasuries gained Wednesday as the Labor Department said initial claims for unemployment benefits in the U.S. rose 21,000 to 313,000, in the week ended Nov. 22, the highest since early September.

“Overall, the data is a bit weaker than expected,” said Charles Comiskey, head of Treasury trading at Bank of Nova Scotia in New York, a primary dealer. “There are no sellers, only buyers.”

Orders for non-military U.S. capital goods excluding aircraft fell 1.3% for a second straight month. Views called for a 1% gain. Bookings for all durable goods rose 0.4%, versus a forecast for a 0.6% decline.

New homes sold at a 458,000 annualized pace in October, Commerce Department figures showed, after a 455,000 rate the previous month that was slower than initially reported. The Bloomberg survey median called for a 471,000 pace.

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