Treasuries Move Notably Higher Following Slew Of Economic Data

Treasuries recovered from an early move to the downside and moved notably higher over the course of the trading session on Thursday.

Bond prices rebounded in morning trading and spent the afternoon hovering firmly in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 6.8 basis points to 3.728 percent.

The ten-year yield closed lower for the second straight session after ending Tuesday’s trading at a three-month closing high.

The strength among treasuries seemed to reflect optimism about the outlook for interest rates following the release of a slew of U.S. economic data.

While the Federal Reserve forecast further rate hikes on Wednesday, traders seem hopeful the central bank will not follow through.

The optimism partly stems from a report from the Labor Department showing initial jobless claims held at their highest level since October 2021 in the week ended June 9th.

The Labor Department said initial jobless claims came in at 262,000, unchanged from the previous week’s revised level.

Economists had expected jobless claims to dip to 249,000 from the 261,000 originally reported for the previous week.

A separate Labor Department report showing import prices in the U.S. fell by much more than expected in the month of May has also generated optimism about the outlook for inflation.

The report said import prices slid by 0.6 percent in May, reflecting a sharp pullback in prices for fuel imports and a modest decrease in prices for non-fuel imports. Economists had expected import prices to edge down by 0.1 percent.

“Nonfuel import prices along with the consumer and producer prices suggest that inflation is moderating,” said Matthew Martin, US Economist at Oxford Economics. “Therefore, it’s unlikely that the Fed follows through with their plan to hike rates in the second half of this year.”

Meanwhile, separate reports showed an unexpected increase in retail sales and an unexpected decrease in industrial production.

Following today’s avalanche of data, the U.S. economic calendar is relatively quiet on Friday, although traders are still likely to keep an eye on a preliminary report on consumer sentiment in June.

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