Bond Report: Treasury yields little changed after weekly U.S. jobless benefit claims data

Treasury yields edged lower early Thursday as investors awaited weekly U.S. data on jobless benefit claims.

What are yields doing?

The yield on the 10-year Treasury note

was 1.597%, down from 1.604% at 3 p.m. Eastern on Wednesday.

The 2-year Treasury note yield

was at 0.496% versus 0.502% Wednesday afternoon.

The 30-year Treasury bond yield

was 1.985%, down from 1.997% late Wednesday.

What’s driving the market?

Yields fell across the curve Wednesday, with 2-, 10- and 30-year maturities seeing their largest one-day pullbacks in more than a week. Analysts said the Wednesday move appeared to be driven in large part by technical factors, with Treasury prices due for a bounce after becoming significantly oversold as yields rose in the wake of last week’s much hotter-than-expected U.S. October Consumer Price Index reading.

Also, a sharp drop in oil prices may have also put pressure on yields. Oil futures remained under pressure early Thursday, with global benchmark Brent crude

trading just above the $80-a-barrel threshold.

A decision looms by President Joe Biden on whether to nominate Federal Reserve Chairman Jerome Powell for a second term. Biden on Tuesday said a decision would come “in about four days.” The decision is widely seen as coming down to a choice between Powell or Fed Gov. Lael Brainard.

Barron’s: Who Will Be the Next Fed Chair? Why Brainard Is Gaining on Powell.

Investors will get a peek at U.S. labor-market conditions Thursday with the release of weekly data on jobless claims at 8:30 a.m. Eastern. Economists expect first-time claims for unemployment benefits to fall to 260,000 from 267,000 a week earlier.

The Philadelphia Federal Reserve Bank’s manufacturing index for November is also due at 8:30 a.m., while the Conference Board’s October Leading Economic Index is due at 10 a.m.

Fed officials will also be in the spotlight, with Chicago Fed President Charles Evans slated to deliver remarks at 2 p.m. and San Francisco President Mary Daly speaking at 3:30 p.m.

What are analysts saying?

“The most compelling interpretation of the [Wednesday] price action was that the oversold conditions simply caught up with U.S. rates and a period of in-range consolidation was warranted,” wrote analysts Ian Lyngen and Ben Jeffery of BMO Capital Markets, in a note.

“The issue now becomes the extent to which the bid can retrace the reflation inspired repricing,” they wrote. “A round trip back to 1.41% in 10s in the near-term is difficult to envision given the magnitude of the recent selloff; if a bid of such significance develops, it’s far more likely to be positions-inspired and occur after Thanksgiving.”

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