Treasuries Close Modestly Lower But Well Off Worst Levels

(RTTNews) - After coming under pressure in early trading on Thursday, treasuries regained some ground over the course of the session but still closed modestly lower.

The rebound by bond prices seemed to run out of time in the abbreviated session, resulting in the lower close. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 2.648 percent.

With the modest gain, the ten-year yield closed higher for the third consecutive session, climbing well off the nearly one-month closing low set on Monday.

The early weakness among treasuries was largely due to a report from the Labor Department showing that U.S. employment rose by much more than anticipated in the month of June.

The Labor Department said non-farm payroll employment jumped by 288,000 jobs in June compared to economist estimates for an increase of about 210,000 jobs.

The report also showed upward revisions to the job growth seen in the two previous months, with employment surging up by 304,000 jobs in April and 224,000 jobs in May. The revised data reflected a net upward revision of 29,000.

The stronger than expected job growth helped push the unemployment rate down to 6.1 percent in June from 6.3 percent in May, hitting its lowest level since September of 2008.

With the data raising concerns about the possibility of higher interest rates, the ten-year yield shot up to its highest intraday level in two months.

However, traders seemed to feel that the pullback by treasuries was overdone, leading to the recovery attempt as the day progressed.

Following the slew of data released over the past week, the economic calendar for next week is nearly devoid of major reports.

Nonetheless, traders are likely to keep an eye on the weekly jobless claims report as well as the minutes of the latest Federal Reserve meeting.

Bond trading could also be impacted by reaction to the Treasury Department's auctions of three-year and ten-year note and thirty-year bonds.