FX.co ★ Treasuries Close Roughly Flat After Seeing Early Strength

After a roller-coaster start, treasury bonds spent most of Thursday hovering close to their starting mark. By day’s end, bond prices had remained relatively stagnant. Consequently, the benchmark ten-year note's yield, which inversely correlates with its price, slightly fell to 4.271 percent.

Encouraging predictions for interest rates initially buoyed treasuries, following the Federal Reserve's monetary policy announcement on Wednesday. Although interest rates stayed the same as predicted, the Fed retained its projection for three interest rate reductions this year.

Nevertheless, the spark in investor enthusiasm dimmed following optimistic U.S. economic data, including a report from the National Association of Realtors (NAR) revealing a stunning leap in existing home sales in February. The NAR reported a 9.5% surge to a 4.38 million annual rate in February, after a 3.1% climb to a 4.00 million rate in January.

Economists were caught off guard by the continuous surge, having projected a 1.5% drop to a 3.94 million rate. The surprising surge pushed existing home sales to their highest mark since reaching an annual rate of 4.530 million in February 2023.

In addition, the Labor Department's report released an unexpected slight dip in first-time claims for U.S. unemployment benefits for the week ending March 16. Initial unemployment claims fell to 210,000, down by 2,000 from the revised figure of 212,000 the previous week. This caught economists by surprise as they had anticipated job claims to rise to 215,000, up from the previously reported 209,000 the preceding week.

Further, the Conference Board issued a report showing its reading on leading U.S. economic indicators had surprisingly increased for the first time in two years in February. The leading economic index nudged up by 0.1% in February, contradicting economists' expectations of a 0.3% decrease.

Following Thursday's spate of critical reports, the U.S. economic calendar seems to have a quiet day ahead on Friday. However, investors will likely pay attention to comments from Federal Reserve Chair Jerome Powell.