Treasuries Extend Upward Trend Amid Optimism Fed Will Delay Taper

(RTTNews) - After moving sharply higher over the course of the previous session, treasuries saw some further upside during trading on Wednesday.

Bond prices moved steadily higher in morning trading before moving roughly sideways in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 2.7 basis points to 2.485 percent.

The moderate drop on the day extended a recent downward trend by the ten-year yield, which fell to a new three-month closing low.

The continued strength among treasuries came as traders continued to react to yesterday's weaker than expected jobs report.

The report said non-farm payroll employment increased by 148,000 jobs in September compared to economist estimates for an increase of about 180,000 jobs.

The weaker than expected job growth suggests some economic sluggishness even before the government shutdown and reinforced expectations that the Federal Reserve will maintain its asset purchase program at the current pace for the foreseeable future.

With the data for the next two months likely to be distorted by the shutdown, economists have suggested that the Fed's decision to scale back its asset purchase program could be delayed until the New Year.

Meanwhile, traders largely shrugged off a report from the Labor Department showing that U.S. import prices rose in line with economist estimates in September.

Trading on Thursday may be impacted by reaction to the Labor Department's report on weekly jobless claims. The Commerce Department is also due to release its report on the August trade balance, although the data is likely to be viewed as old news.