Treasuries fall second day as economy expands more than forecast

Allied Talks

Treasuries rose earlier this week on speculation the U.S., France and Britain were moving closer to military action against Syria after the nation’s government allegedly used chemical weapons against civilians.

“Before acting, we need proof” of chemical weapon use, Najat Vallaud-Belkacem, a French cabinet member and spokeswoman for the government, said on I-tele. A probe into the chemical attack by United Nations inspectors will be ready in “two or three days,” she said. “It’s important to be anchored in international law.”

U.S. President Barack Obama and U.K. Prime Minister David Cameron face a decision whether to attack Syria without a UN mandate amid Russian resistance, demands for consultation from lawmakers at home and domestic opposition to involvement in another conflict in the Middle East.

Market Reaction

“We’ve seen a small reversal in sentiment as markets begin pricing in a delay to a potential Syria air strike,” Deutsche Bank AG analysts including Jim Reid in London wrote in a note to clients. “The strike is running into potential delays with UN inspectors saying they need several more days to carry out their investigations in Syria and to undertake scientific analysis before reporting back.”

The economy expanded at a faster pace in the second quarter as a smaller trade deficit and gains in inventories overshadowed the effects of federal budget cutbacks. GDP growth topped the median forecast of 79 economists surveyed by Bloomberg projected a 2.2% gain.

Jobless claims in the week ended Aug. 24 dropped 6,000 to 331,000 from a revised 337,000 the week before that was higher than initially reported, the Labor Department said. The median forecast of 50 economists surveyed by Bloomberg called for a drop to 332,000.

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