Treasuries Move Higher On Unexpected Increase In Jobless Claims

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After ending the previous session little changed, treasuries moved to the upside during the trading day on Thursday.

Bond prices moved higher early in the session and remained firmly positive throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.1 basis points to 0.644 percent.

The initial strength among treasuries came following the release of a report from the Labor Department showing an unexpected increase in first-time claims for U.S. unemployment benefits in the week ended August 15th.

The report said initial jobless claims climbed to 1.106 million, an increase of 135,000 from the previous week’s revised level of 971,000.

The increase surprised economists, who had expected jobless claims to drop to 925,000 from the 963,000 originally reported for the previous week.

A separate report released by the Federal Reserve Bank of Philadelphia showed regional manufacturing activity continued to expand in the month of August, although the pace of growth slowed by more than anticipated.

The Philly Fed said its diffusion index for current activity dropped to 17.2 in August from 24.1 in July, but a positive reading still indicates growth in regional manufacturing activity. Economists had expected the index to dip to 21.0.

In other economic news, the Conference Board released a report showing the pace of growth by its leading economic index for the U.S. slowed in the month of July.

The report said the leading economic index jumped by 1.4 percent in July after surging up by 3.0 percent in June and by 3.1 percent in May.

“Despite the recent gains in the LEI, which remain fairly broad-based, the initial post-pandemic recovery appears to be losing steam,” said Ataman Ozyildirim, Senior Director of Economic Research at The Conference Board.

He added, “The LEI suggests that the pace of economic growth will weaken substantially during the final months of 2020.”

Trading on Friday may be impacted by reaction to the National Association of Realtors’ report on existing home sales in the month of July.

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