Treasuries rebounded in Thursday's trading following a modest pullback in the previous session. Bond prices initially lacked direction but picked up in the afternoon, resulting in a 4.3 basis point decline in the yield on the ten-year note to 4.449 percent. This more than offset the 2.9 basis point increase seen on Wednesday, dropping to its lowest closing level in a month.
The uptick in treasuries came after the Treasury Department announced this month's auction of $25 billion worth of thirty-year bonds attracted average demand. The auction drew a high yield of 4.635 percent and a bid-to-cover ratio of 2.41, slightly above the average ratio of 2.39 from the last ten auctions.
Treasuries also gained from a Labor Department report that showed a larger than expected increase in first-time claims for U.S. unemployment benefits for the week ending May 4th. Jobless claims rose to 231,000, a 22,000 increase from the previous week, surpassing economists' prediction of 210,000. This marked a peak in jobless claims since August 26th, when it hit 234,000.
The data sparked renewed optimism in the possibility of the Federal Reserve lowering interest rates in the coming months. While the expectation is that rates will remain unchanged in June, the likelihood of a rate reduction by September has reached 89.3 percent, according to CME Group's FedWatch Tool.
Potential impacts on trading this coming Friday could stem from the release of the May consumer sentiment report, which includes readings on inflation expectations. Remarks from several Federal Reserve officials could also influence the market.
