Bond Report: 10-year, 30-year Treasury yields plumb April lows as U.S. jobless claims point to labor-market troubles

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U.S. Treasury yields tilted lower on Thursday after a key weekly update of the U.S. labor market’s health showed elevated job losses as measures to reopen the economy have stalled in the face of the unrelenting COVID-19 pandemic.

What are Treasurys doing?

The 10-year Treasury note yield TMUBMUSD10Y, 0.584% fell 1.3 basis points to 0.582%, around its lowest levels since April 21. The two-year note yield TMUBMUSD02Y, 0.141% edged up 0.2 basis points to 0.147%, while the 30-year bond yield TMUBMUSD30Y, 1.232% dropped 4.1 basis points to 1.249%, its lowest since April 29. Bond prices move in the opposite direction of yields.

What’s driving Treasurys?

In economic data, the number of Americans filing for unemployment benefits for the first time rose by 109,000 to 1.416 million in the latest weekly period ending July 18, in line with forecasts from MarketWatch-polled economists. Continuing jobless claims fell by 1.1 million to 16.2 million.

The reminder of the labor market’s woes comes as investors have tracked high-frequency economic indicators showing that worries around a re-acceleration of coronavirus cases had curbed consumers and business activity in states like Florida, Texas and California.

The total tally of cases in the U.S. topped 4 million, according to data aggregated by John Hopkins University.

Investors remain focused on the prospect of further stimulus measures from the federal government and the Federal Reserve. Reports say Senate Majority Leader Mitch McConnell will unveil a $1 trillion fiscal stimulus package later on Thursday.

The Treasury Department sold $14 billion of Treasury inflation-protection securities in the afternoon. In recent days, robust demand for TIPs have driven inflation-adjusted yields, or real yields, lower and inflation expectations higher.

What did market participants say?

“The small increase in weekly jobless claims for last week confirmed what many economists/traders have been seeing in the high-frequency economic activity indicators,” said Jim Vogel, an interest-rate strategist at FHN Financial.