On Thursday, U.S. Treasury bonds fluctuated throughout the trading day, but ultimately saw strong gains by day's end. Despite pulling back following an initial rise, bond prices made a recovery approaching the close of day. The yield on the ten-year note, which has an inverse relationship with its price, fell 4.6 basis points to 4.309%.
This early bolstering of Treasuries was instigated by the release of a Labor Department report, disclosing that U.S. initial jobless claims had grown more than anticipated for the week concluding March 30th. Initial unemployment claims increased to 221,000, a rise of 9,000 from the revised 212,000 claims of the previous week. Economists had initially projected a modest increase to 214,000 from the 210,000 jobless claims initially reported for the prior week.
With this larger-than-expected growth, initial jobless claims hit their peak since reaching 225,000 for the week concluded on January 27th. The increase in jobless claims prompted some positive speculation on the future of interest rates, though whether or not a rate cut will occur in June remains unclear. As per CME Group's FedWatch Tool, currently there is a 66.4% likelihood of a quarter-point rate cut by the Federal Reserve in June, while a 32.2% probability remains for stable rates.
Despite a mid-session decline, buying interest saw a late resurgence in the final hour of trading as investors shifted their attention to Friday's impending release of the Labor Department's closely observed monthly employment report. Current predictions estimate a 200,000 job increase in March, following February's 275,000 job surge, with the unemployment rate expected to remain steady at 3.9%.
Investor response to the forthcoming monthly jobs report and any associated impact on interest rate projections will likely be key drivers of trading on Friday.
