Treasuries See Further Downside Amid Worries About Monetary Policy
Treasuries moved to the downside during trading on Thursday, extending the sell-off seen throughout the New Year.
Bond prices moved lower early in the session and remained stuck in the red throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.8 basis points to 1.733 percent.
The ten-year yield closed higher for the fourth consecutive session, reaching its highest closing level in over nine months.
Treasuries saw further downside as traders continued to react to the minutes of the latest Federal Reserve meeting.
The minutes of the Fed’s December meeting had a hawkish tone, suggesting the central bank will more aggressive in tightening monetary policy.
In addition to raising rates more quickly than previously anticipated, the minutes also indicated the Fed plans to begin reducing its balance sheet shortly after the first rate hike.
On the U.S. economic front, the Labor Department released a report unexpectedly showing a modest increase in first-time claims for U.S. unemployment benefits in the week ended January 1st.
The report showed initial jobless claims crept up to 207,000, an increase of 7,000 from the previous week’s revised level of 200,000.
The uptick came as a surprise to economists, who had expected jobless claims to edge down to 197,000 from the 198,000 originally reported for the previous week.
A separate report from the Institute for Supply Management showed U.S. service sector growth slowed from a record high in the month of December.
The ISM said its services PMI slid to 62.0 in December from 69.1 in November, although a reading above 50 still indicates growth. Economists had expected the index to drop to 66.9.
Looking ahead, trading on Friday is likely to be driven by reaction to the Labor Department’s closely watched monthly jobs report.
Economists currently expect employment to jump by 400,000 jobs in December after rising by 210,000 jobs in November. The unemployment rate is expected to edge down to 4.1 percent from 4.2 percent.
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