Treasuries Close Nearly Flat After Recovering From Early Weakness

(RTTNews) - After recovering from an early sell-off, treasuries showed a lack of direction throughout the remainder of the trading session on Thursday before closing nearly flat.

Bond prices spent most of the day bouncing back and forth across the unchanged line. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 2.556 percent after reaching an early high of 2.614 percent.

The initial weakness among treasuries was partly due to lingering concerns about the outlook for interest rates following yesterday's strong second quarter GDP report.

A Labor Department report showing a bigger than expected increase in employee compensation costs further fueled speculation that the Federal Reserve could begin raising interest rates sooner than previously anticipated.

The report said compensation costs increased by 0.7 percent in the second quarter, reflecting the fastest rate of growth since the third quarter of 2008. Economists had been expecting a 0.5 percent increase.

The Labor Department said wages and salaries climbed by 0.6 percent in the second quarter, while benefits jumped by 1.0 percent.

However, treasuries climbed well off their early lows due in part to their appeal as a safe haven amid ongoing geopolitical concerns and a sell-off on Wall Street.

The choppy trading seen for the remainder of the session likely reflected uncertainty ahead of the release of the Labor Department's monthly jobs report on Friday.

Economists expect employment to increase by about 235,000 jobs in July following an increase of 288,000 jobs in June. The unemployment rate is expected to hold steady at a nearly six-year low of 6.1 percent.

The jobs report is likely to overshadow a slew of other economic data due to be released on Friday, including reports on personal income and spending, manufacturing activity, and construction spending.