Analysts expect positive payrolls report on Friday
By Deborah Levine, MarketWatch
NEW YORK (MarketWatch) — Treasury prices erased their decline on Thursday, leaving yields near the lowest in at least two months, after a report showed the service sector of the U.S. economy expanded at a slower pace than expected in April.
Yields on 10-year notes 10_YEAR +0.21% , which move inversely to prices, traded at 1.93%, from as high as 1.96% in earlier trading.
The benchmark security’s yield level is near its lowest since late February.
Thirty-year-bond yields 30_YEAR +0.10% stayed up 1 basis point at 3.13%. A basis point is one one-hundredth of a percentage point.
Yields on 5-year notes 5_YEAR +0.24% also erased a rise to trade at 0.83%, also near their lowest in about two months.
The Institute for Supply Management’s index on the nonmanufacturing sector of the U.S. economy fell to 53.5% last month -- its lowest reading since December. See story on ISM.
The report could lower traders’ expectations for a key employment report on Friday, said analysts at CRT Capital Group.
Treasury prices were little changed through the Asian and European session, then dropped after a report showing U.S. jobless claims fell more than forecast to 365,000 in the latest week.
It was the first drop in a month, and fell to just slightly above a four-year low, according to the Labor Department. Read story on jobless claims.
“The return of claims to their March levels strengthens our belief that the labor market did not derail in April,” said economists at RBS.
The data come a day before the government’s monthly unemployment report for April — one of the most closely watched indicators of the economy’s strength.
Economists surveyed by MarketWatch predict U.S. nonfarm payrolls gained by 163,000 last month, up from 120,000 in March. See economic calendar.
“We still believe that there will be a bit of a payback after the upward bias provided by the warm winter,” said Steven Ricchiuto, chief economist at Mizuho Securities. “This leaves us with a 150,000 to 175,000 payroll estimate. A number would have to be below 125,000 to signal an unexpected slowing in the pace of new hiring.”
Earlier this week, benchmark 10-year note yields closed at their lowest level since late February as a string of data left investors disappointed. Read recent Bond Report.
Also, investors are worried about Europe’s political ability to stick with budget cuts in key countries needed to get their debt under control, as protests grow louder and leaders show signs of losing political support.
Deborah Levine is a MarketWatch reporter, based in New York.
