After closing roughly flat for two consecutive sessions, treasuries moved to the upside during the trading day on Thursday.
Bond prices moved notably higher in morning trading but gave back some ground in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, dipped by 1.7 basis points to 2.866 percent.
The early strength among treasuries came as traders digested the European Central Bank’s latest monetary policy decision, with the ECB leaving rates unchanged, as widely expected.
The ECB’s accompanying statement removed a phrase indicating a willingness to increase its asset purchase program if necessary.
“The change is arguably the ECB’s first cautious step along a path of gradual policy normalization, which explains the immediate rise in the euro,” said Jennifer McKeown, Chief European Economist at Capital Economics.
She added, “But it won’t have come as a complete surprise given the ECB’s earlier warning that it would ‘revisit’ its forward guidance early this year.”
Trading activity was somewhat subdued, however, as traders looked ahead to the release of the Labor Department’s closely watched monthly jobs report on Friday.
Employment is expected to jump by 200,000 jobs in February, matching the increase seen in January. The unemployment rate is expected to dip to 4.0 percent from 4.1 percent.
Ahead of the monthly report, the Labor Department released a report this morning showing a bigger than expected rebound in initial jobless claims in the week ended March 3rd.
The report said initial jobless claims climbed to 231,000, an increase of 21,000 from the previous week’s unrevised level of 210,000. Economists had expected jobless claims to rise to 220,000.
The bigger than expected increase came after jobless claims fell to their lowest level since December of 1969 in the previous week.
Uncertainty about the details of President Donald Trump’s planned tariffs on steel and aluminum imports may also have kept some traders on the sidelines.
The monthly jobs report is likely to be in focus on Friday, overshadowing a report on wholesale trade and comments by some Federal Reserve officials.