Markets & Finance

Treasury Prices Climb After Economic Data


From Standard & Poor's Equity Research

MARKETSCOPE : Treasury bond prices climbed Thursday, as investors watched economic indicators and a speech from Federal Reserve Chairman Ben Bernanke.

The benchmark 10-year Treasury notes were yielding 4.73% at 4:00 p.m. Eastern Daylight Time compared to 4.75% at Wednesday's close. Yields fall when prices rise.

Federal Reserve Chairman Ben Bernanke said solid productivity gains remain supportive for potential Gross Domestic Product growth going forward, but demographic changes are lowering labor force participation rates which are likely to damp output in the future.

St. Louis Fed President Poole said price stability was the Fed's primary focus and that a 1-2% core PCE price range was consistent with that goal.

News hit that the U.S. PCE deflator rose 0.3% in July versus 0.1% in June, which was revised from 0.2%. On a yearly basis it decelerated to 3.4% from 3.5% previously. Personal Consumption Expenditures rose 0.8% in July vs. 0.4% in June. Personal Income rose 0.5% vs. 0.6% in June.

A slough of other economic data indicators also hit the tape Thursday. They included Initial Jobless Claims, which fell 2,000 to 316,000 for the week ended Aug. 26 from a revised 318,000 the week before. The Conference Board's Help-Wanted index fell to a 2006 low of 32 in July from 34 in June, which was revised from 33. The U.S. Chicago PMI slipped to 57.1 in August from 57.9 in July, pretty much in line with the 57.0 reading markets expected. Factory Orders fell 0.6% in July, better than the 1.0% drop expected after the 1.5% increase in June, which was revised from 1.2%.


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