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Treasury yields ticked higher on Thursday as traders looked through a raft of U.S. economic data that provided a snapshot of the depths of the recession resulting from the coronavirus pandemic.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.703% rose 1.3 basis points to 0.690%, while the 2-year note rate TMUBMUSD02Y, 0.191% was virtually unchanged at 0.180%. The 30-year bond yield TMUBMUSD30Y, 1.476% climbed 3.1 basis points to 1.464%.
What’s driving Treasurys?
Economic data pointed to the pain among businesses and households as they looked to recover from the current downturn. Initial weekly jobless claims stood at 2.12 million, in line with expectations.
One positive sign for the labor market was that the number of Americans continuing to file for jobless claims fell to 21.1 million, from 24.9 million, a sign that employees could be returning to work.
In other data, the U.S. economy contracted by 5% in the first-quarter in the second estimate, while durable goods plunged 17.2% in April. Last month’s pending home sales are due at 10 a.m. ET.
Tensions between Washington and Beijing drew attention as a source of continued geopolitical concerns. Chinese lawmakers passed a National Security Law for Hong Kong that has created a new flashpoint as U.S. and China spar against each other over Beijing’s handling of the coronavirus.
Congress also approved a bill that would impose sanctions on Chinese officials involved in the mass surveillance and detention of Uighurs and other ethnic groups in the western Xinjiang region.
New York Federal Reserve Bank President John Williams and Philadelphia Fed President Patrick Harker will speak on Thursday.
The day before, Williams suggested the central bank was looking into the possibility of aiming to keep yields for different bond maturities at fixed levels, much like in Japan, but St. Louis Fed President James Bullard argued with yields so low already, such policies may not be meaningful.
What did market participants’ say?
“Overall, a marginally better round of economic data than feared, but by no means ‘good news’ — rather just less bad,” said Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets, in a note.
