Treasuries Extend Downward Trend Ahead Of Jobs Report

Treasuries moved notably lower over the course of the trading day on Thursday, extending the downward trend seen in recent sessions.

Bond prices came under pressure in morning trading and saw further downside late in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed by 4.6 basis points to 2.598 percent.

With the continued increase on the day, the ten-year yield climbed to its highest closing level in well over two years.

The sustained weakness among treasuries came as traders looked ahead to the release of the closely watched monthly jobs report on Friday.

The report is expected to show that employment increased by about 195,000 jobs in February after jumping by 227,000 jobs in January. The unemployment rate is expected to dip to 4.7 percent from 4.8 percent.

A report showing continued job growth in the month of February is likely to further reinforce expectations that the Federal Reserve will raise interest rates at its monetary policy meeting next week.

Ahead of the monthly jobs report, the Labor Department released a report this morning showing a rebound in initial jobless claims in the week ended March 4th.

The report said initial jobless claims climbed to 243,000, an increase of 20,000 from the previous week’s unrevised level of 223,000. Economists had expected jobless claims to rise to 235,000.

The bigger than expected increase came after jobless claims fell to their lowest level since March of 1973 in the previous week.

The Labor Department also released a report showing that import and export prices both rose by slightly more than anticipated in the month of February.

Traders were also digesting the European Central Bank’s widely expected decision to leave interest rates unchanged and maintain its asset purchase program.

The ECB said it stands ready to increase the size or duration of its asset purchase program if the economic outlook becomes less favorable.

In his subsequent press conference, ECB President Mario Draghi said risks surrounding the euro area growth outlook have become less pronounced but remain tilted to the downside.

Meanwhile, the Treasury Department sold $12 billion worth of thirty-year bonds on the day, attracting average demand.

The thirty-year bond auction drew a high yield of 3.170 percent and a bid-to-cover ratio of 2.34, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.30.

Today’s thirty-year bond auction came after the Treasury sold $24 billion worth of three-year notes on Tuesday and $20 billion worth of ten-year notes on Wednesday.

Trading on Friday is likely to be driven by reaction to the Labor Department’s closely watched monthly employment report for February.

The material has been provided by InstaForex Company – www.instaforex.com

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