Treasuries Recover From Early Slump But Close Modestly Lower

(RTTNews) - Treasuries came under pressure early in the session on Thursday but regained ground over the course of the trading day.

Bond prices climbed well off their worst levels and briefly turned positive but ended the day modestly lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by 1.8 basis points to 4.284 percent.

The ten-year yield rebounded after edging slightly lower over the two previous sessions, reaching a new three-month closing high.

The early pullback by treasuries came after the Labor Department released a report showing an unexpected decline by first-time claims for U.S. unemployment benefits in the week ended October 26th.

The report said initial jobless claims fell to 216,000, a decrease of 12,000 from the previous week's revised level of 228,000.

Economists had expected jobless claims to inch up to 230,000 from the 227,000 originally reported for the previous week.

With the unexpected decrease, jobless claims dropped to their lowest level since hitting a matching figure in the week ended May 18th.

Traders were also reacting to closely watched consumer price inflation data that largely came in line with economist estimates.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.2 percent in September and the annual rate of growth slowed to 2.1 percent, which both matched expectations.

However, the annual rate of growth by the core PCE price index, which excludes food and energy prices, was unchanged from the previous month at 2.7 percent. Economists had expected the pace of growth to slow to 2.6 percent.

The slightly faster than expected core price growth may have added to recent concerns the Federal Reserve will lower interest rates more slowly than hoped.

Selling pressure waned over the course of the session, however, as traders looked ahead to the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expect employment to rise by 113,000 jobs in October after jumping by 254,000 jobs in September, while the unemployment rate is expected to hold at 4.1 percent.

The monthly jobs report is likely to be in the spotlight on Friday, although a reading on manufacturing activity may also attract attention.