Treasuries Move Back To The Downside After Yesterday’s Rebound

Following the rebound seen in the previous session, treasuries showed a notable move back to the downside during trading on Thursday.

Bond prices drifted lower over the course of the morning and remained firmly negative in afternoon trading. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 7.7 basis points to 2.917 percent.

The ten-year yield more than offset the 7.3 basis point drop seen on Wednesday, ending the session at its highest closing level since December 2018.

Concerns about the outlook for interest rates contributed to the pullback by treasuries, with traders keeping an eye on comments by Federal Reserve Chair Jerome Powell.

Participating in an International Monetary Fund panel, Powell said he believes it would be appropriate to raise rates “a little more quickly” and predicted a 50 basis point rate hike would be on the table at the Fed’s May meeting.

“Our goal is to use our tools to get demand and supply back in synch, so that inflation moves down and does so without a slowdown that amounts to a recession,” Powell said.

“I don’t think you’ll hear anyone at the Fed say that that’s going to be straightforward or easy,” he added. “It’s going to be very challenging. We’re going to do our best to accomplish that.”

On the U.S. economic front, the Labor Department released a report showing a slight decrease in first-time claims for U.S. unemployment benefits in the week ended April 16th.

The report showed initial jobless claims edged down to 184,000, a decrease of 2,000 from the previous week’s revised level of 186,000.

Economists had expected jobless claims to dip to 180,000 from the 185,000 originally reported for the previous week.

Meanwhile, a separate from the Federal Reserve Bank of Philadelphia showed growth in Philadelphia-area manufacturing activity slowed more than expected in the month of April.

The Philly Fed said its diffusion index for current activity slumped to 17.6 in April from 27.4 in March. While a positive reading still indicates growth, economists had expected the index to show a more modest drop to 21.0.

The Conference Board also released a report showing its reading on leading U.S. economic indicators increased in line with economist estimates in the month of March.

A lack of major U.S. economic data may keep some traders on the sidelines on Friday, as traders continue to ponder the outlook for monetary policy.

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