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Treasury yields inched lower on early Thursday as investors saw another sharp rise in U.S. weekly initial jobless claims due to the coronavirus-driven economic downturn.
What are Treasurys doing?
The 10-year Treasury note yield TMUBMUSD10Y, 0.685% was down 1.2 basis points to 0.701%, while the 2-year note rate TMUBMUSD02Y, 0.176% edged 0.6 basis point lower to 0.176%. The 30-year bond yield TMUBMUSD30Y, 1.382% fell a basis point to 1.403%. Bond prices move in the opposite direction of yields.
What’s driving Treasurys?
The number of Americans applying for unemployment benefits for the first time increased by 3.2 million, down from the 3.8 million in the previous week. Analysts polled by MarketWatch had forecast claims to run at 3.1 million. In other data, first-quarter productivity dropped 2.5%, from a 1.2% increase in the fourth quarter of 2019.
See: Jobless claims jump 3.2 million in early May, but historic rate of layoffs is slowing
Meanwhile, representatives from U.S. and China will hold talks as soon as next week on implementing the phase one trade deal, Bloomberg News reported, citing sources. This comes as the Trump administration and Beijing clash over China’s handling of the coronavirus outbreak.
As for the Federal Reserve, Atlanta Fed President Raphael Bostic, Minneapolis Fed President Neel Kashkari and Philadelphia Fed President Patrick Harker were speaking throughout the day.
The Bank of England held interest rates steady on Thursda, along with the pace of its quantitative easing program. Appending this decision, they said that in one scenario U.K.’s economy could shrink by 14% this year and unemployment rise to 8%.
What did market participants’ say?
“As awful these figures are, it is the least amount of claims since mid March as we’ve likely cycled through the worst of the forced shutdown. We can now start analyzing the pace of reopenings, the level of business and what that new reality will look like,” said Peter Boockvar, chief investment officer at the Bleakley Advisory Group, in a note.
