Treasuries Close Modestly Lower After Early Volatility

(RTTNews) - Treasuries moved modestly lower over the course of the trading session on Thursday, moving back to the downside following the rebound seen in the previous session.

Bond prices showed a lack of direction in morning trading but spent the afternoon lingering in negative territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2.7 basis points to 3.292.

The pullback by treasuries came following comments from Federal Reserve Chair Jerome Powell, who reiterated the central bank's commitment to aggressively fighting inflation.

"We need to act now, forthrightly, strongly as we have been doing," Powell said during a Q&A session at the Cato Institute's 40th Annual Monetary Conference. "And we have to keep at it until the job is done."

Powell also once again warned about the dangers of allowing elevated prices to become entrenched, noting the Fed has a "responsibility" to bring inflation back down to 2 percent.

"The longer inflation remains well above target, the greater the risk the public does begin to see higher inflation as the norm, and that has the capacity to raise the costs of getting inflation down," he said.

Powell's comments are seen as reinforcing expectations that the Fed will raise interest rates by another 75 basis points at its next meeting later this month.

CME Group's FedWatch Tool currently indicates an 86.0 percent chance of a 75 basis point rate hike at the September 20-21 meeting and just a 14.0 percent chance of a 50 basis point rate hike.

In U.S. economic news, the Labor Department released a report unexpectedly showing a modest decrease in initial jobless claims in the week ended September 3rd.

The report showed initial jobless claims edged down to 222,000, a decrease of 6,000 from the previous week's revised level of 228,000.

Economists had expected jobless claims to inch up to 240,000 from the 232,000 originally reported for the previous week.

With the unexpected dip, jobless claims fell to their lowest level since hitting 202,000 in the week ended May 28th.

A lack of major U.S. economic data may lead to light trading on Friday, although traders are still likely to keep an eye on comments from several Fed officials.