Treasuries Regain Ground Following Recent Weakness

After initially showing a lack of direction, treasuries moved moderately higher over the course of the trading session on Thursday.

Bond prices climbed more firmly into positive territory as the day progressed. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell 3.0 basis points to 4.260 percent.

The rebound by treasuries may have reflected bargain hunting following the weakness seen over the past few sessions, which lifted the ten-year yield back toward recent highs.

Traders largely shrugged off a Labor Department report showing an unexpected decrease in first-time claims for U.S. unemployment benefits in the week ended September 2nd.

The report said initial jobless claims fell to 216,000, a decrease of 13,000 from the previous week’s revised level of 229,000.

Economists had expected jobless claims to rise to 234,000 from the 228,000 originally reported for the previous week.

Jobless claims decreased for the fourth consecutive week, falling to their lowest level since a matching figure in the week ended February 11th.

“The claims data are a reminder that labor market conditions may be cooling, but the labor market is still tight,” said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, “The claims figures don’t change our view for the Fed to keep policy steady at its meeting later this month, but more moderation in job growth will be needed to keep rate hikes permanently off the table.”

While the Fed is still widely expected to leave interest rates unchanged at its next meeting later this month, CME Group’s FedWatch Tool indicates a 43.4 percent chance of another rate hike in November.

Trading activity may be somewhat subdued during Friday’s session amid a relatively quiet day on the U.S. economic front.

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