After initially showing a lack of direction, treasuries moved higher over the course of the trading session on Thursday.
Bond prices moved to the upside in afternoon trading and remained firmly positive going into the close. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.5 basis points to 1.299 percent.
The advance by treasuries partly reflected a positive reaction to the results of the Treasury Department’s auction of $24 billion worth of thirty-year bonds, which attracted above average demand.
The thirty-year bond auction drew a high yield of 1.910 percent and a bid-to-cover ratio of 2.49, while the ten previous thirty-year bond auctions had an average bid-to-cover ratio of 2.31.
The bid-to-cover ratio is a measure of demand that indicates the amount of bids for each dollar worth of securities being sold.
The strong demand for the thirty-year bond auction came a day after the Treasury revealed its auction of $38 billion worth of ten-year notes also attracted above average demand.
The choppy trading seen earlier in the session came after the Labor Department released a report showing a bigger than expected decrease in first-time claims for U.S. unemployment benefits in the week ended September 4th.
The report said initial jobless claims fell to 310,000, a decrease of 35,000 from the previous week’s revised level of 345,000. Economists had expected jobless claims to edge down to 335,000 from the 340,000 originally reported for the previous week.
With the bigger than expected decrease, jobless claims once again dropped to their lowest level since hitting 256,000 in the week ended March 14, 2020.
“While the August jobs report showed employers may have hit the pause button on hiring amid renewed concerns about the pandemic, the claims data suggest a reluctance to lay off workers amid a record number of job openings,” said Nancy Vanden Houten, Lead Economist at Capital Economics.
Last Friday, the Labor Department released a separate report showing U.S. job growth fell well short of economic estimates in the month of August.
Traders were also reacting to the European Central Bank’s latest monetary policy decision, with the bank announcing it would slow the pace of asset purchases under its pandemic emergency purchase program.
Looking ahead, trading on Friday may be impacted by reaction to the Labor Department’s report on producer price inflation in the month of August.