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Treasurys ease after auction

January 15, 2010 | "CNNMoney"

NEW YORK (CNNMoney.com) -- Treasury prices were little changed Thursday after gaining earlier in the day following an auction of 30-year bonds and weaker-than-expected reports on retail sales and the labor market.

What prices are doing: The benchmark 10-year note was flat at 97-1/32, and the yield fell 3.74% from 3.78% late Wednesday. Bond prices and yields move in opposite directions.

The 30-year bond fell 3/32 to 95-28/32 and its yield rose to 4.63%. The 2-year note was unchanged at 100-5/32 and yielded 0.93%.

What's moving the market: The government concluded $84 billion worth of debt sales Thursday with an $13 billion auction of reopened 30-year bonds that exceeded analysts' expectations.

Investors submitted bids totaling $34.9 billion. The bid-to-cover ratio, a measure of demand, was 2.68, compared to 2.45 at the last 30-year sale in December. The U.S. also sold 3- and 10-year notes earlier this week.

Retail sales fell 0.3% in December after an upwardly revised 1.8% the month before, according to the Commerce Department.

The decline surprised analysts who had expected a 0.5% increase, according to consensus estimates gathered by Briefing.com.

Sales outside the auto sector fell 0.2% last month versus a forecasted 0.3% gain.

Separately, the Labor Department said there were 444,000 initial jobless claims filed in the week ended Jan. 9, up 11,000 from a revised 433,000 the previous week. Economists surveyed by Briefing.com expected new claims to rise to 437,000.

The government also said 4,596,000 people had filed continuing claims in the week ended Jan. 2, the most recent data available. That's down 211,000 from the preceding week's revised 4,807,000 claims.

What analysts are saying: Peter Cardillo, chief market strategist at Avalon Partners in New York, said demand was better-than-expected at Wednesday's auction, which helped boost prices earlier in the day.

The government has been auctioning record amounts of debt over the last year to help fund its efforts to stimulate the economy, and many analysts worry the constant influx of new issues could eventually weigh on demand for Treasurys.

By Ben Rooney, staff reporter

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