Treasuries Move Back To The Upside Ahead Of Jobs Data

(RTTNews) - Following the pullback seen in the previous session, treasuries moved back to the upside over the course of the trading day on Thursday.

Bond prices moved steadily higher throughout much of the session before closing firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dropped 4.4 basis points to 1.786 percent.

With the decrease, the ten-year yield more than offset the modest uptick seen on Wednesday, falling to its lowest closing level in a month.

The rebound by treasuries partly reflected uncertainty ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

The report is expected to show an increase of about 210,000 jobs in March after employment jumped by 242,000 jobs in February. The unemployment rate is expected to hold at 4.9 percent.

Jay Morelock, an economist at FTN Financial, said, "After Chair Yellen dampened expectations of a Fed move in April, all eyes turn to Friday's employment report to gauge whether the Fed will lean toward June or push the next rate hike into the second half of the year."

Traders were also reacting to comments by Chicago Federal Reserve President Charles Evans, who reiterated his support for two interest rate hikes this year.

Evans told an asset management forum the Fed could hike rates once in middle of the year and again at the end of the year.

The Fed is scheduled to hold its next monetary policy meeting toward the end of April, followed by another in mid-June.

On the U.S. economic front, the Labor Department released a report this morning showing a modest increase in initial jobless claims in the week ended March 26th.

The report said initial jobless claims climbed to 276,000, an increase of 11,000 from the previous week's unrevised level of 265,000. Economists had expected jobless claims to inch up to 266,000.

A separate report from MNI Indicators showed a stronger than expected rebound by Chicago-area business activity in the month of March.

The jobs report is likely to be in the spotlight on Friday, overshadowing another batch of data on manufacturing activity, consumer sentiment, and construction spending.