Treasuries initially extended yesterday’s late-day rally on Thursday but pulled back near the unchanged line over the course of the session.
Bond prices eventually ended the session roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 3.396 percent.
In early trading, the ten-year yield fell as low as 3.334 percent, reflecting its lowest intraday level in almost five months.
A positive reaction to the Federal Reserve’s interest announcement on Wednesday contributed to the early strength among treasuries, but buying interest waned as the day progressed as traders looked ahead to Friday’s monthly jobs report.
Economists currently expected employment to increase by 185,000 jobs in January after jumping by 223,000 jobs in December, while the unemployment rate is expected to inch up to 3.6 percent from 3.5 percent.
A day ahead of the monthly report, the Labor Department released a report unexpectedly showing another modest decrease by first-time claims for U.S. unemployment benefits in the week ended January 28th.
The report said initial jobless claims edged down to 183,000, a decrease of 3,000 from the previous week’s unrevised level of 186,000. The dip surprised economists, who had expected jobless claims to climb to 200,000.
Jobless claims declined for the fourth time in five weeks, falling to their lowest level since hitting 181,000 in the week ended April 23, 2022.
A separate report released by the Labor Department showed U.S. labor productivity surged by more than expected in the fourth quarter of 2022.
While the monthly jobs report is likely to be in the spotlight on Friday, traders are also likely to keep an eye on a report on service sector activity.
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