Treasuries Move Notably Higher Following BoE Decision

(RTTNews) - After ending the previous session roughly flat, treasuries showed a notable move to the upside during trading on Thursday.

Bond prices moved higher in early trading and remained firmly positive throughout the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.9 basis points to 1.503 percent.

The strength among treasuries came following the Bank of England's announcement of its decision to reduce interest rates following Britain's vote to leave the European Union.

The BoE revealed that its Monetary Policy Committee voted unanimously to lower interest rates by 25 basis points to a record low 0.25 percent, marking the first rate cut in over seven years.

Noting that the exchange rate has fallen and the outlook for growth in the short to medium term has weakened markedly, the central bank also indicated that it could lower rates further.

The bank also introduced a package of measures designed to provide additional monetary stimulus, including a scheme to reinforce the pass-through of the rate cut.

In his subsequent press conference, BoE Governor Mark Carney said banks have "no excuse" not to pass on lower borrowing costs to customers.

Additionally, the BoE said it would purchase up to 10 billion pounds worth of corporate bonds and 60 billion pounds worth of U.K. government bonds.

The central bank also slashed its forecast for U.K. economic growth, saying it now expects the economy to grow by 0.8 just percent in 2017 compared to its previous forecast for 2.3 percent growth.

Buying interest was somewhat subdued, however, as traders looked ahead to the Labor Department's monthly jobs report due to be released on Friday.

The report is expected to show an increase of about 185,000 jobs in July after employment jumped by 287,000 jobs in June. The unemployment rate is expected to edge down to 4.8 percent from 4.9 percent.

The Labor Department released a report this morning showing an unexpected uptick in initial jobless claims in the week ended July 30th.

The report said initial jobless claims rose to 269,000, an increase of 3,000 from the previous week's unrevised level of 266,000. Economists had expected claims to edge down to 265,000.

A separate report from the Commerce Department showed that factory orders slumped by 1.5 percent in June compared to economist estimates for a 1.8 percent drop.

The monthly U.S. jobs report is likely to be in focus on Friday, overshadowing reports on international trade and consumer credit.