Treasuries Move Modestly Higher Following Recent Pullback

(RTTNews) - Treasuries moved modestly higher during trading on Thursday, regaining some ground after trending lower over the past few sessions.

Bond prices moved to the upside in morning trading but pulled back off their highs in the afternoon. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 2.79 percent.

With the modest drop on the day, the ten-year yield pulled back off the two-month closing high set in the previous session.

The modest strength among treasuries came as some traders looked to the relative safety of bonds ahead of the release of the Labor Department's monthly jobs report on Friday.

Adding to uncertainty about the monthly jobs data, the Labor Department released a report showing a bigger than expected increase in weekly jobless claims.

The Labor Department said initial jobless claims climbed to 326,000 in the week ended March 29th, an increase of 16,000 from the previous week's revised figure of 310,000. Economists had expected jobless claims to rise to 320,000.

A separate report from the Commerce Department showed that the U.S. trade deficit unexpectedly widened in the month of February amid an increase in imports and a drop in exports.

The Commerce Department said the trade deficit widened to $42.3 billion in February from a revised $39.3 billion in January. The trade deficit had been expected to narrow to $38.5 billion.

Meanwhile, the Institute for Supply Management released a report showing that U.S. service sector activity expanded at a faster rate in March, although the index of activity in the sector rose by less than economists had expected.

The ISM said its non-manufacturing index climbed to 53.1 in March from 51.6 in February. A reading above 50 indicates continued growth in the service sector, but economists had been expecting the index to reach a reading of 53.5.

Trading on Friday is likely to be driven by reaction to the jobs report. Economists expect employment to increase by about 200,000 jobs in March following the addition of 175,000 jobs in February. The unemployment rate is also expected to edge down to 6.6 percent from 6.7 percent.