Treasuries Close Firmly In The Red After ECB Decision, Upbeat Data

(RTTNews) - After turning higher over the course of the previous session, treasuries moved back to the downside during trading on Thursday.

Bond prices came under pressure in early trading and remained firmly negative throughout the session. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 3.8 basis points to 2.448 percent.

The pullback by treasuries came on the heels of the European Central Bank's surprise decision to cut interest rates to record lows.

Following its monetary policy meeting, the ECB said it is lowering all three of its main interest rates by 10 basis points, reducing the benchmark rate to 0.05 percent.

ECB President Mario Draghi also said the bank plans to purchase asset-backed securities to boost the economy and combat the threat of deflation.

A batch of largely upbeat U.S. economic data also weighed on treasuries, including a report from the Instituted for Supply Management showing an unexpected acceleration in the pace of service sector growth in the month of August.

The ISM said its non-manufacturing index climbed to 59.6 in August from 58.7 in July, with a reading above 50 indicating growth in the service sector.

The modest increase by the non-manufacturing index came as a surprise to economists, who had expected the index to dip to a reading of 57.5.

Payroll processor ADP released a report earlier in the day showing another notable increase in U.S. private sector employment in the month of August, although the pace of job growth came in below economist estimates.

ADP said private sector employment rose by 204,000 jobs in August following a downwardly revised increase of 212,000 jobs in July. Economists had been expecting an increase of about 220,000 jobs.

A separate report from the Labor Department showed that first-time claims for U.S. unemployment benefits rose by slightly more than expected in the week ended August 30th.

Meanwhile, the Commerce Department released a report showing that the U.S. trade deficit unexpectedly came in slightly narrower in the month of July.

Economic data is likely to be in the spotlight during trading on Friday, as the Labor Department is scheduled to release its closely watched monthly jobs report.

The report is expected to show an increase of about 225,000 jobs in August compared to the addition of 209,000 jobs reported for July.