Treasuries Extend Yesterday’s Sharp Pullback Ahead Of Jobs Data

Treasuries moved to the downside during trading on Thursday, extending the sharp pullback seen in the previous session.

Bond prices regained ground after coming under pressure in morning trading but remained firmly negative. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 6.7 basis points to 3.826 percent.

Treasuries continued to give back ground after moving notably higher early in the week amid lingering concerns about the outlook for interest rates.

Traders were also looking ahead to the release of the Labor Department’s closely watched monthly employment report on Friday.

Economists currently expect employment to jump by 250,000 jobs in September after surging by 315,000 jobs in August, while the unemployment rate is expected to hold at 3.7 percent.

However, Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics, said, “Any easing of labor market conditions will be welcome by the Fed but won’t change the FOMC’s plans to continue to raise rates in an effort to bring down inflation.”

“The labor market should still be characterized as tight, with the ratio of job openings to unemployed workers still elevated in August despite a small decline,” she added.

As the monthly jobs report looms, the Labor Department released a separate report this morning showing first-time claims for U.S. unemployment benefits rebounded by more than expected in the week ended October 1st.

The report said initial jobless claims climbed to 219,000, an increase of 29,000 from the previous week’s revised level of 190,000. Economists had expected jobless claims to inch up to 200,000 from the 193,000 originally reported for the previous week.

The revised figure for the previous week reflects the lowest number of jobless claims since the week ended April 23rd.

Trading on Friday is likely to be driven by reaction to the monthly jobs report and the impact on expectations for future rate hikes.

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