U.S. Treasury prices rallied Thursday, with the 10-year note
leading the run on the back of higher-than-expected weekly initial
jobless claims that amounted to the biggest miss versus
expectations since early May.
The market is looking out to the week's final auction of $16
billion 30-year bonds on deck, with investors fairly optimistic on
the offering even as the yield sits near the lowest level in over a
The market had been lightly pressured early in corrective
trading, while seeing some support as the German bund was dunked
below a record low yield of 1.00% as domestic GDP contracted and
European growth flattened.
The U.S. weekly jobless claims showed a large 21,000 increase to
311,000, far beyond a consensus range of 286,000 to 300,000. There
was already some support in place after a soft open as global data
proved generally negative, although equities continued to find
reason to aim higher in the hopes the bad news would lead to added
stimulus and a Federal Reserve slower to increase rates.
The 10-year note's yield swung to recently trade at 2.385%, the
lowest yield since mid-June 2013, from an early 2.435%. The 30-year
was near 3.2116%, from 3.25%. The five-year rallied to trade at
1.546%, from 1.58%, and the two-year's yield went to 0.392% from
The curve trade unwound to a flatter pose, with the yield
differential between the two- and 10-years running near a 1.99-plus
spread against an early gap of 2.01.
Treasury will announce details on next week's three- and
six-month bill sales as well as for the 52 weeks and five-year TIPS
auctions at 11 a.m. ET. The 30-year auction results will be
released at 1 p.m. ET.
The Federal Reserve plans to do permanent open-market operations
of $1.60 billion to $1.90 billion in Outright Treasury Coupon
Purchases within the 2019 to 2020 maturity range.