After coming under pressure late in the previous session, treasuries showed a strong move back to the upside during trading on Thursday.
Bond prices moved notably higher in morning trading and remained firmly positive throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.7 basis points to 1.679 percent.
The rebound by treasuries came after the ten-year yield ended the previous session at its highest closing level in over a year, inspiring some bargain hunting.
Treasuries may also have benefited from their appeal as a safe haven ahead of the Labor Department’s closely watched monthly jobs report, which will be released while the markets are closed on Friday.
Economists currently expect employment to jump by 647,000 jobs in March after climbing by 379,000 jobs in February. The unemployment rate is expected to drop to 6.0 percent from 6.2 percent.
Potentially adding to uncertainty about the monthly jobs report, the Labor Department released a report showing first-time claims for U.S. unemployment benefits rebounded from their lowest level in a year in the week ended March 27th.
The report said initial jobless claims rose to 719,000, an increase of 61,000 from the previous week’s revised level of 658,000.
Economists had expected jobless claims to edge down to 680,000 from the 684,000 originally reported for the previous week.
The downwardly revised number of claims in the previous week was the lowest since the week ended March 14, 2020, just before the start of the coronavirus lockdowns.
Meanwhile, bond traders seemed to shrug off a report from the Institute for Supply Management showing the pace of growth in U.S. manufacturing activity accelerated by much more than anticipated in the month of March.
The ISM said its Manufacturing PMI jumped to 64.7 in March from 60.8 in February, with a reading above 50 indicating growth in manufacturing activity. Economists had expected the index to inch up to 61.3.
With the much bigger than expected increase, the Manufacturing PMI reached its highest level since hitting 69.9 in December of 1983.
Reaction to the monthly jobs report is likely to drive trading early next week, although reports on service sector activity, factory orders, the U.S. trade deficit, and producer prices may also attract attention.
The Federal Reserve is also scheduled to release the minutes of its latest monetary policy meeting, which may shed additional light on the Fed’s economic outlook.