US Treasuries again shy away from chart barrier
NEW YORK, April 7 (Reuters) - U.S. Treasury debt prices slipped away on Thursday as speculators, frustrated by repeated failures at a major chart barrier, decided to cut their long positions in an otherwise aimless market.
The benchmark 10-year note <US10YT=RR> fell 4/32 in price, lifting yields to 4.44 percent from 4.43 percent. Speculators have been trying to crack technical resistance at 4.42 percent all week in the hope of forcing a short-covering rally, but so far in vain.
A clean break of 4.42 percent could see a test of the recent rough around 4.39 percent and perhaps a move to 4.34 percent or lower, dealers said. The latest failure, however, could easily cause yields to test the top of the week's band around 4.49 percent.
Early economic data were not soft enough to force the break. Initial claims for jobless benefit fell to 336,000 from a revised 353,000 the week before, almost matching forecasts of a drop to 332,000.
The dip suggested the previous week's jump was mainly statistical noise in this very volatile series of data.
"There has been some modest deterioration in labor market conditions since early February," said Alan Ruskin, research director at 4CAST.
"The data is mildly bond friendly, but proximity to the key 4.39-4.41 percent zone on the 10-year has made bond traders loathe to buy without something more substantive to hand," he added.
Unfortunately for traders there was little in the way of substantive data due Thursday, with only wholesale inventories and consumer credit to come.
The two-year note <US2YT=RR> dipped 1/32, taking yields up to 3.70 percent from 3.69 percent. Five-year notes <US5YT=RR> lost 2/32, lifting yields to 4.10 percent from 4.08 percent and away from resistance around 4.05 percent.
The 30-year Treasury bond <US30YT=RR> slipped 10/32 in price, raising its yield to 4.75 percent from 4.74 percent.
Traders clung to a faint hope that one of the Federal Reserve officials scheduled to speak could say something market-moving.
Fed Bank of Philadelphia President Anthony Santomero speaks on "Making Monetary Policy: What Do We Know and When Do We Know It?" around 12:30 p.m. (1630 GMT).
Fed Bank of St. Louis President William Poole speaks late in the day, though the topic is "the economics of higher education".
Traders reported some talk of hedge funds shorting Treasuries to buy euro debt after European Central Bank Governor Claude Trichet said there was no sign of significant inflation pressure building.
The comment eased speculation the ECB may raise rates any time soon and encouraged funds to flow away from U.S. debt, which is haunted by expectations of many more hikes from he Fed.