Bonds Slightly Higher Following Surprising Economic Reports

Bonds Slightly Higher Following Surprising Economic Reports []

Thursday, April 12, 2007 9:16:41 AM - Bonds remained modestly higher on Thursday morning, following the release of data on the economy. Higher-than-expected numbers on import prices and jobless claims, paired with Wednesday afternoon’s release of the Fed minutes, brought back some fears about the state of the economy. This caused traders to take their money to the safety of fixed income investments.

The 10-year yield opened lower and remained below the unchanged line during the first hour of the day. This reversed some of the yield gains seen during the last hour of Wednesday’s session. After 45 minutes, the 10-year yield was off its low for the day, but remained down 2.5 basis points at 4.714%. Meanwhile, the 30-year yield was down 2 basis points and the 5-year yield 2.3 basis points.

Thursday morning, the Department of Labor released two key economic reports, showing an unexpected increase in weekly jobless claims as well as a sharp rise in import prices. The data may raise some concerns about the outlook for the economy and inflation. The Labor Department’s report on initial jobless claims in the week ended April 7 showed that jobless claims rose to 342,000 from the previous week’s revised figure of 323,000. The increase came as surprise to economists, who had been expecting jobless claims to edge down to 320,000.

A separate report from the Labor Department showed that import prices surged up 1.7 percent in March after a downwardly revised 0.1 percent increase in February. This marks the biggest increase in import prices since May of 2006, when prices rose 1.8 percent. The increase in import prices was largely due to a sharp rise in prices for petroleum imports, which rose 9.0 percent in March following a downwardly revised 0.6 percent increase in the previous month.