Treasury Department scheduled to sell 30-year bonds on Thursday
By Saumya Vaishampayan, MarketWatch
NEW YORK (MarketWatch) — Treasurys fell on Thursday, pushing yields higher, as weekly jobless claims declined to the second lowest level in five years and ahead of the Treasury Department’s $13 billion sale of 30-year bonds at 1 p.m. Eastern.
Yields on the benchmark 10-year Treasury note 10_YEAR +1.53% rose 3 basis points to 2.05% in morning trade. Yields move inversely to prices and one basis point is one one-hundredth of a percentage point.
Initial jobless claims for the week ended March 9 beat expectations by dropping 10,000 to a seasonally adjusted 332,000, according to data released Thursday. The lowest reading in the last five years — in mid-January — was impacted by unusual seasonal factors and layoffs after the holidays.
Thursday’s jobless claims number is the latest to point to a recovery in the labor market. Nonfarm-payrolls data released Friday showed the economy added more jobs than expected in February as the unemployment rate fell to its lowest level since December 2008. Investors watch the labor-market outlook closely as the Federal Reserve has associated the future of its bond-buying program to an unemployment rate of 6.5%.
“Any time you get some small improvement in the labor market that reduces slightly the chance that the Fed will continue to buy Treasurys, which is negative for the market,” said Gary Pollack, head of fixed-income trading at Deutsche Bank AG’s private-wealth-management unit in New York.
Any change to the Fed’s purchases, however, would require several months of steady improvement in the labor market, he said. The Fed’s monthly asset purchases consist of $85 billion in Treasury and mortgage debt.
Yields on the 30-year bond 30_YEAR +0.59% rose 2 basis points to 3.24% and yields on the five-year note rose 2 basis points to 0.899%.
U.S. stocks gained on Thursday as the Standard & Poor’s 500 Index SPX +0.36% flirted with its record close of 1,565.15 from 2007 and the Dow Jones Industrial Average DJIA +0.42% extended gains into a tenth consecutive session.
The Australian economy resoundingly beat expectations with its job gains in February. “That gave a good feel for risky assets and we’ve been trading inversely to risky assets for a while,” Pollack said of Treasurys.
The Federal Open Market Committee is scheduled to meet next week.
Saumya Vaishampayan is a MarketWatch reporter based in New York. You can find her on Twitter @saumvaish.
