Treasuries Close Roughly Flat After Pulling Back Off Early Highs

Treasuries showed a notable upward move in early trading on Wednesday but came under pressure over the course of the morning.

Bond prices subsequently climbed off their worst levels and spent the afternoon lingering near the unchanged line. The yield on the benchmark ten-year note, which moves opposite of its price, ended the day down by less than a basis point at 4.416 percent.

In early trading, the ten-year yield fell as low as 4.365 percent, marking its lowest intraday level in two-months.

The pullback by treasuries came after the Labor Department released a report showing first-time claims for unemployment benefits fell by more than expected in the week ended November 18th.

The report said initial jobless claims fell to 209,000, a decrease of 24,000 from the previous week’s revised level of 233,000.

Economists had expected jobless claims to dip to 225,000 from the 231,000 originally reported for the previous week.

The bigger than expected decline came after a week after jobless claims reached their highest level since hitting 240,000 in the week ended August 12th.

“We are entering the time of year when seasonal noise will make the claims data harder to interpret,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics. “Stepping back, though, initial claims remain at a level that is consistent with relatively low layoffs.”

She added, “Looking past seasonal noise, we think the claims data are consistent with a job market that is cooling enough to keep rate hikes off the table, but too strong to make rate cuts a consideration any time soon.”

Treasuries saw further downside after the University of Michigan released revised data showing consumer sentiment in the U.S. deteriorated by less than previously estimated in the month of November. The report also showed increases in year-ahead and long-term inflation expectations

Following the Thanksgiving Day holiday on Thursday, trading activity is likely to be subdued on Friday amid a lack of major U.S. economic data.

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