Markets

U.S. TREASURIES: Prices Jump as Jobless Claims Climb, 10-Year Hits Lowest Yield Since June 2013

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 year.

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 0.425%.

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.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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