Treasuries Close Modestly Higher Ahead Of Key Inflation Reading

After ending the previous session nearly unchanged, treasuries showed a modest move to the upside during trading on Thursday.

Bond prices fluctuated over the course of the session but managed to close in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.5 basis points to 3.669 percent.

Traders seemed reluctant to make significant moves ahead of tomorrow’s report on personal income and spending, which includes a reading on inflation said to be preferred by the Federal Reserve.

With Fed Chair Jerome Powell saying the central bank will require “substantially more evidence” inflation is on a sustained downward trend before halting its interest rate hikes, traders are likely to keep a close eye on the inflation reading.

The Labor Department released a report this morning showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended December 17th.

The report said initial jobless claims crept up to 216,000, an increase of 2,000 from the previous week’s revised level of 214,000. Economists had expected jobless claims to rise to 222,000 from the 211,000 originally reported for the previous week.

A separate report from the Commerce Department showed U.S. economic activity unexpectedly jumped more than previously estimated in the third quarter.

The report showed the surge in real gross domestic product in the third quarter was upwardly revised to 3.2 percent from the previously reported 2.9 percent. Economists had expected the pace of GDP growth to be unrevised.

The stronger than previously estimated growth in the third quarter came after GDP slumped by 1.6 percent in the first quarter and fell by 0.6 percent in the second quarter.

Meanwhile, the Conference Board released a report showing a continued slump by its reading on leading U.S. economic indicators in the month of November.

The report said the leading economic index tumbled by 1.0 percent in November after sliding by a revised 0.9 percent in October.

Economists had expected the leading economic index to decrease by 0.5 percent compared to the 0.8 percent drop originally reported for the previous month.

While the inflation reading is likely to be in the spotlight on Friday, traders are also likely to keep an eye on reports on durable goods orders, new home sales and consumer sentiment.

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