Interest rates settle into narrow trading range ahead of Bernanke speech

Rates settle into tight range before Fed speech

NEW YORK — Interest rates edged up in early trading and stayed there for much of the day Thursday after an improvement in jobless claims gave the market a slightly positive indicator on the economy.

Bond trading was held to a tight range as investors looked ahead cautiously to a speech early Friday by Federal Reserve chairman Ben Bernanke at the central bank’s annual conference.

Rates had ticked up early in the day after a report showed new claims for unemployment benefits fell more than expected last week. It was the first weekly decline in first-time claims for jobless benefits after three weeks of increases.

The yield on the 10-year Treasury note was at 2.52 percent Thursday afternoon. It had fallen as low as 2.49 percent before the unemployment report on lingering worries about the economy. That rate helps determine interest rates on mortgages and other consumer loans.

The price for 10-year notes maturing in August 2020 rose 21.875 cents to $100.969.

Bond and stock investors were hesitant to make big moves late in the day because they want to know what Bernanke has to say about the economy. Many economic reports in recent months have suggested that the economy is slowing down.

Bernanke’s more cautious tone in recent comments has added to uncertainty about growth. That has kept bond yields hovering around their lowest levels since early 2009, when the economy was in the depths of a recession.

Bond yields frequently fall and prices rise when traders aren’t certain about future growth. Bonds offer investors a relatively safe alternative to stocks. They won’t necessarily provide the potential return that stocks do, but they also have less risk for loss.

An auction for seven-year notes indicated there is still plenty of demand for Treasurys even with yields so low. The government easily auctioned $29 billion in seven-year notes Thursday.

The bid-to-cover ratio, a measure of demand, was 2.98, higher than in recent auctions for notes with the same maturity length.

The yield on previously issued seven-year notes that mature in July 2017 fell to 1.96 percent from 1.99 percent late Wednesday. The price of the seven-year note rose 15.625 cents to $102.688.

In other trading, the yield on the two-year note maturing in July 2012 was unchanged at 0.53 percent as its price held steady at $99.688.

The price on the 30-year bond that matures in August 2040 rose 43.75 cents to $105.938, pushing its yield down to 3.55 percent from 3.57 percent.

The yield on the three-month bill was unchanged at 0.15 percent.