Treasuries continued their decline for the third consecutive session on Thursday, experiencing a significant downward shift during trading.
Bond prices faced early pressure and remained negative throughout the day, resulting in a 5.5 basis point increase in the benchmark ten-year note yield, which rose to 3.740%. This marks the third straight day of rising yields, extending the rebound from the one-year closing low observed on Monday.
This ongoing pullback in treasuries follows the Federal Reserve's announcement on Wednesday to reduce interest rates by 50 basis points. The Fed cited increased confidence that inflation is moving toward its 2% target, lowering the federal funds rate target range to 4.75% to 5.00%.
Although the Fed's rate cut—the first since March 2020—was widely anticipated, there was some uncertainty regarding whether the reduction would be 25 or 50 basis points. Officials also projected further rate cuts in the coming months and into next year, fostering optimism about a potential soft landing for the economy and diminishing bonds' safe-haven appeal.
Contributing to this optimism, the Labor Department reported an unexpected decrease in initial jobless claims, which fell to a nearly four-month low for the week ending September 14th. The report indicated that first-time claims dropped to 219,000, a 12,000 decrease from the previous week's revised level of 231,000, contrary to economists' expectations of no change from the 230,000 originally reported.
As a result, jobless claims reached their lowest level since May 18th, when they were recorded at 216,000.
With several significant economic events earlier in the week, Friday's economic calendar appears relatively quiet, potentially leading to subdued trading activity.
