Treasuries showed a notable move to the downside during trading on Thursday as traders looked ahead to the closely watched monthly jobs report on Friday.
Bond prices moved steadily lower in morning trading before moving roughly sideways in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 3.3 basis points to 1.217 percent.
The ten-year yield continued to regain ground after ending Monday’s trading at its lowest closing level in almost four months.
The weakness among treasuries came as optimism about tomorrow’s monthly jobs report reduced the safe haven appeal of bonds.
With the monthly jobs report looming, the Labor Department released a report this morning showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended July 31st.
The report said initial jobless claims slipped to 385,000, a decrease of 14,000 from the previous week’s revised level of 399,000.
Economists had expected jobless claims to dip to 384,000 from the 400,000 originally reported for the previous week.
Chris Low, Chief Economist at FHN Financial, said the total number of unemployment recipients fell by 1.5 million between the June and July surveys, suggesting a “hefty” increase in employment in the monthly jobs report on Friday.
Economists currently expect the report to show employment surged up by 870,000 jobs in July after jumping by 850,000 jobs in June. The unemployment rate is expected to dip to 5.7 percent from 5.9 percent.
Meanwhile, a separate report from the Commerce Department showed the U.S. trade deficit widened by more than expected in the month of June, reaching a new record high.
The Commerce Department said the trade deficit widened to $75.7 billion in June from a revised $71.0 billion in May.
Economists had expected the trade deficit to widen to $74.1 billion from the $71.2 billion originally reported for the previous month.
The wider than expected trade deficit came as the value of imports jumped by 2.1 percent to $283.4 billion, while the value of exports rose by 0.6 percent to $207.7 billion.
Trading on Friday is likely to be driven by reaction to the Labor Department’s monthly jobs report, which could have an impact on the outlook for monetary policy.
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