By Ben Eisen, MarketWatch
NEW YORK (MarketWatch) -- Treasury prices slid on Thursday after positive economic data, putting U.S. government debt on track to start out the month with losses.
The 10-year note 10_YEAR +2.91% yield, which moves inversely to price, rose 6.5 basis points on the day to 2.649%. The 30-year bond 30_YEAR +1.87% yield rose 7 basis points to 3.706% while the 5-year note 5_YEAR +4.49% yield rose 5.5 basis points to 1.438%.
Treasurys extended their price slide after initial weekly jobless claims fell by 19,000. That puts the gauge of people applying for unemployment benefits at 326,000 for the week ended July 27, its lowest level since January of 2008.
“Bond prices are suffering losses as traders are using this data to set up short Treasurys for tomorrow’s jobs report,” said Thomas di Galoma, senior vice president of fixed-income-rates trading at ED&F Man Capital Markets, in a note.
Monthly jobs data on Friday will be closely watched by bond investors because the Federal Reserve has said employment data will help inform its monetary policy decisions. Economists polled by MarketWatch expect the U.S. to have created 175,000 jobs in July.
Nonetheless, the claims data contains some indications beyond the Friday report.
“To some extent, the claims print today is far more important than the jobs data,” said Krishna Memani, chief investment officer of fixed income at OppenheimerFunds, noting that it is more forward-looking than the Friday jobs data, which records employment in the previous month.
Other data on Thursday put pressure on Treasurys. Markit’s final manufacturing purchasing managers index rose to 53.7 in July, above the flash reading of 53.2 and the June reading of 51.9 in June.
Thursday’s data comes after the Fed said in a statement Wednesday it was keeping its monetary policies — including its $85 billion per month bond-purchase program — unchanged for now, but raised concerns about the pace of economic improvement.
Bond yields rose sharply for much of May and June as the market fretted about the possibility that the Fed could scale back, or taper, its bond purchases. The market has largely priced in a September tapering.
Read: Why Pimco’s Mohamed El-Erian says bonds are safer than stocks.
Given the slow pace of the economic recovery, bond yields look like they may settle for the moment, said Memani.
“I don’t think the secular rise interest rates is on the horizon just yet,” he said, adding “2.50% is a good level for 10-year Treasurys at the moment, given 2% growth and 1% inflation.”
Also on Thursday, the European Central Bank and Bank of England both left their key lending rates unchanged at 0.5%.
Read: Live-blog of ECB president Mario Draghi’s press conference.
The yield on Germany’s 10-year bond, or bund BX:TMBMKDE-10Y -0.04% fell 1.5 basis points on the day to 1.659%, according to Tradeweb.
Ben Eisen is a MarketWatch reporter based in New York.
