Treasuries Show Strong Move Back To The Upside

After coming under pressure late in the previous sessions, treasuries showed a notable move back to the upside during trading on Thursday.

Bond prices gave back some ground in afternoon trading after a morning rally but remained firmly positive. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 5.8 basis points to 1.511 percent.

With the drop on the day, the ten-year yield offset a big chunk of the jump seen on Wednesday, when the yield jumped by 7 basis points.

The rebound by treasuries was partly attributed to sharply lower commodities prices, with the price of gold showing a particularly steep drop on the day.

Traders also continued to digest yesterday’s announcement from the Federal Reserve, which saw the central bank move up its timeline for raising interest rates.

The Fed previously predicted that interest rates would remain at near-zero levels through 2023, but the latest projections point to two rate hikes during that year.

The shift in the timeline comes as the Fed also forecast much faster core consumer price inflation this year, although the accompanying statement still attributed the increase in inflation to “transitory factors.”

Treasuries may have benefited from the fact the Fed did not specifically comment about tapering its asset purchases in the official statement.

In his post-meeting press conference, Fed Chair Jerome Powell stressed the central bank would provide “advance notice” before making any changes to its asset purchases.

On the economic front, the Labor Department released a report showing an unexpected uptick in initial jobless claims in the week ended June 12th.

The report said initial jobless claims rose to 412,000, an increase of 37,000 from the previous week’s revised level of 375,000.

The increase surprised economists, who had expected jobless claims to edge down to 359,000 from the 376,000 originally reported for the previous week.

Jobless claims had declined in eight out of the nine previous weeks, falling to their lowest levels since March of 2020.

A separate report from the Federal Reserve Bank of Philadelphia showed Philadelphia-area manufacturing activity expanded at a slightly slower rate in the month of June.

Meanwhile, the Conference Board released a separate report showing another significant increase by its index of leading U.S. economic indicators.

Following the Fed announcement and a slew of U.S. economic earlier this week, trading on Friday may be somewhat subdued amid a relatively quiet day.

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