Easing Interest Rate Concerns Contribute To Turnaround By Treasuries

After an initial move to the downside, treasuries showed a significant turnaround over the course of trading session on Thursday.

Bond prices climbed well off their early lows and firmly into positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 7.0 basis points to 3.714 percent after reaching a high of 3.821 percent.

The turnaround by treasuries came following the release of a Labor Department report showing a jump in weekly jobless claims, which helped ease concerns about the outlook for interest rates.

The Labor Department said initial jobless claims climbed to 261,000 in the week ended June 3rd, an increase of 28,000 from the previous week’s revised level of 233,000.

Economists had expected jobless claims to inch up to 235,000 from the 232,000 originally reported for the previous week.

With the much bigger than expected advance, jobless claims reached their highest level since hitting 264,000 in the week ended October 30, 2021.

While economists noted jobless claims can be volatile around holidays like Memorial Day, the data seems to have added to optimism about the Federal Reserve pausing its interest rate hikes next week.

The Fed, which has previously warned about the impact of labor market tightness, is due to announce its latest monetary policy decision next Wednesday.

A lack of major U.S. economic data may lead to light trading activity on Friday, as traders look ahead to next week’s Fed meeting and inflation data.

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