Treasuries Regain Ground After Initially Extending Downward Trend

(RTTNews) - After extending their recent downward trend early in the session, treasuries showed a significant turnaround over the course of the trading day on Thursday.

Bond prices climbed well off their worst levels of the day and firmly into positive territory. As a result, the yield on the benchmark ten-year, which moves opposite of its price, slumped 6 basis points to 5.24 percent.

The rebound by treasury yields may have partly reflected bargain hunting following recent weakness, which drove the ten-year yield to its highest levels since April 2002.

Traders may have felt the recent downward move by treasuries was overdone in light of yesterday's tamer-than-expected inflation data.

Treasuries saw further downside in recent sessions even as CME Group's FedWatch Tool suggests the chances the Federal Reserve raises rates next month have tumbled to 23.8 percent from 68.6 percent a week ago.

Meanwhile, bond traders were also looking ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently employment to increase by 90,000 jobs in September after jumping by 162,000 jobs in August, while the unemployment rate is expected to hold steady at 4.1 percent.

A day ahead of the release of the monthly jobs report, the Labor Department released a report this morning showing first-time claims for U.S. unemployment benefits unexpectedly edged slightly lower in the week ended September 26th.

The Labor Department said initial jobless claims slipped to 197,000, a decrease of 1,000 from the previous week's revised level of 198,000.

Economists had expected jobless claims to rise to 200,000 from the 197,000 originally reported for the previous week.