Treasuries Move To The Downside As Jobs Report Looms

(RTTNews) - After closing roughly flat for two straight sessions, treasuries came under pressure over the course of the trading session on Thursday.

Bond prices turned lower in morning trading and remained firmly negative for the remainder of the day. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 2.350 percent.

With the modest increase on the day, the ten-year yield reached its highest closing level in nearly three months.

The weakness among treasuries was partly due to comments by San Francisco Federal Reserve President John Williams, who suggested the central bank does not need to see higher inflation to support another interest rate hike.

Trading activity was somewhat subdued, however, with uncertainty ahead of the closely watched monthly jobs report due on Friday keeping some traders on the sidelines.

Employment is expected to rise by 90,000 jobs in September after climbing by 156,000 jobs in August. The unemployment rate is expected to hold at 4.4 percent.

The Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits fell by more than expected in the week ended September 30th.

The report said initial jobless claims dropped to 260,000, a decrease of 12,000 from the previous week's unrevised level of 272,000. Economists had expected jobless claims to edge down to 265,000.

A separate report from the Commerce Department showed that the U.S. trade deficit narrowed by more than anticipated in the month of August.

The report said the trade deficit narrowed to $42.4 billion in August from a revised $43.6 billion in July. The trade deficit had been expected to narrow to $42.7 billion.

The Commerce Department also released a report showing factory orders jumped by 1.2 percent in August compared to estimates for an increase of 1.0 percent.

Treasuries remained in negative territory after the House approved a $4.1 trillion budget resolution, taking a key step in efforts to pass their tax reform plan.

The budget resolution includes major spending cuts but is largely seen as a vehicle for Republicans to enact tax reform.

The bill unlocks the reconciliation process, allowing Republicans to pass tax reform with a simple 51-vote majority in the Senate.

The monthly jobs report will likely be in the spotlight on Friday, overshadowing reports on wholesale trade and consumer credit as well as speeches by several Federal Reserve officials.