Treasuries Close Roughly Flat After Seeing Initial Weakness

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After moving to the downside early in the session, treasuries regained ground over the course of the trading day on Thursday.

Bond prices climbed well off their early lows before ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 0.677 percent.

The flat close by treasuries came ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.

Economists expect employment to increase by about 850,000 jobs in September after jumping by 1.371 million jobs in August. The unemployment rate is expected to edge down to 8.2 percent from 8.4 percent.

Ahead of the monthly report, the Labor Department released a report this morning showing a bigger than expected drop in first-time claims for U.S. unemployment benefits in the week ended September 26th.

The report said initial jobless claims fell to 837,000, a decrease of 36,000 from the previous week’s revised level of 873,000.

Economists had expected jobless claims to dip to 850,000 from the 870,000 originally reported for the previous week.

Meanwhile, the Commerce Department released a separate report showing a steep drop in U.S. personal income in the month of August, with the sharp pullback reflecting a decrease in unemployment insurance benefits.

The Commerce Department said personal income tumbled by 2.7 percent in August after rising by an upwardly revised 0.5 percent in July.

Economists had expected personal income to slump by 2.5 percent compared to the 0.4 percent increase originally reported for the previous month.

At the same time, the report said personal spending climbed by 1.0 percent in August after jumping by a downwardly revised 1.5 percent in July.

Personal spending was expected to increase by 0.8 percent compared to the 1.9 percent spike originally reported for the previous month.

The Institute for Supply Management also released a report unexpectedly showing a modest slowdown in the pace of growth in manufacturing activity in the month of September.

The ISM said its purchasing managers index edged down to 55.4 in September after rising to 56.0 in August. While a reading above 50 still indicates growth in the manufacturing sector, economists had expected the index to inch up to 56.3.

The monthly jobs report is likely to be in the spotlight on Friday, overshadowing separate reports on consumer sentiment and factory orders.

Traders may also keep an eye on the latest developments in Washington, as lawmakers attempt to reach an agreement on a new coronavirus stimulus bill.

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