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U.S. Treasury yields slipped for a third day early Thursday after Federal Reserve chair Jerome Powell on Wednesday confirmed the central bank would do everything to support the economy through the coronavirus pandemic and other officials suggested the timetable for a tapering of asset purchases and interest rate hikes is unlikely to be dragged forward.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 1.142% fell 1.4 basis points to 1.138%, while the 2-year note rate TMUBMUSD02Y, 0.113% was unchanged at 0.111%. The 30-year bond yield TMUBMUSD30Y, 1.915% slid 1.5 basis points to 1.909%.
What’s driving Treasurys?
Investors are monitoring the state of the U.S. labor market, with weekly jobless benefit claims due at 8:30 a.m. ET. MarketWatch-polled analysts predict a reading of 760,000, down from 779,000.
President of the Federal Reserve bank of San Francisco Mary Daly said the U.S. central bank is unlikely to taper its $120 billion monthly bond-buying program this year, following similar remarks by Fed Chairman Jerome Powell on Wednesday.
Powell said the Fed would need to see “substantial progress” on its employment and inflation goals before pulling back its asset purchases.
Also on the radar of investors, the U.S. Treasury Department will hold its last bond sale on Thursday, selling $27 billion of 30-year bonds.
What did market participants say?
“Bonds were static overnight after the dovish comments on inflation and the labor market last night by Fed chair Powell,” said Kenneth Broux, a strategist at Societe Generale.
“He implicitly acknowledged the weak employment numbers of last week and below-forecast core [consumer prices] yesterday but was more explicit in repeating that the bank is not even thinking about withdrawing policy support,” said Broux.
