Treasuries Move Sharply Lower Ahead Of Jobs Report

After ending the previous session modestly lower, treasuries showed a substantial move to the downside during trading on Thursday.

Bond prices came under pressure in morning trading and remained firmly negative throughout the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 13.2 basis points to 3.265 percent.

With the sharp increase on the day, the ten-year yield jumped to its highest closing level in well over two months.

The sell-off by treasuries came as traders remained concerns about the outlook for interest rates ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

The report, which is expected to show employment jumped by 300,000 jobs in August after surging by 528,000 jobs in July, could have a significant impact on the outlook for rates.

With the more closely watched monthly jobs report looming, the Labor Department released a report this morning unexpectedly showing a modest decrease in first-time claims for U.S. unemployment benefits in the week ended August 27th.

The report showed initial jobless claims edged down to 232,000, a decrease of 5,000 from the previous week’s revised level of 237,000.

The dip came as a surprise to economists, who had expected jobless claims to inch up to 248,000 from the 243,000 originally reported for the previous week.

A report released by the Institute for Supply Management showed its reading on U.S. manufacturing activity remained at a two-year low in August.

The ISM said its manufacturing PMI came in at 52.8 in August, unchanged from July. Economists had expected the index to edge down to 52.0.

While the index remained at its lowest level since hitting 52.4 in June 2020, a reading above 50 still indicates growth in the manufacturing sector.

The monthly jobs report is likely to be in the spotlight on Friday, overshadowing a separate report on factory orders.

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