Bond Report: U.S. Treasury yields trade mixed ahead of jobless claims, private-sector employment data


U.S. government bond yields were trading mixed on Thursday as investors watched for data on private sector employment, weekly jobless benefit claims and the services sector, ahead of the monthly May jobs reading due on Friday.

How Treasurys are trading
  • The 10-year Treasury note

    was yielding 1.600%, down 2.2 basis points from Wednesday’s level at 3 p.m. Eastern.
  • The 30-year Treasury bond rate

    was at 2.286%, up 0.6 basis point from a day ago.
  • The 2-year Treasury note

    was yielding 0.145%, down 0.2 basis point.

On Wednesday, the 10-year yield saw its biggest drop since May 25.

Fixed-income drivers

Thursday’s main attraction for fixed-income is the weekly report on U.S. jobless benefit claims and a monthly private-sector reading of the state of the labor market. Both will serve as an appetizer to Friday’s U.S. Labor Department jobs report, which is viewed as a potential catalyst for markets that have been range bound for weeks, as investors watch for further evidence that the U.S. economy is overheating in the rebound from the COVID pandemic.

Automatic Data Processing Inc. private sector jobs data for May at 8:15 a.m. ET is expected to show an increase of 627,000 jobs in May, based on consensus forecast from economists’ polled by Econoday.

Meanwhile, economists also are forecasting the reading of those seeking jobless benefits to hit 400,000 for the week ended May 29, which would be a fresh pandemic low, versus 406,000 in the prior week. That report will be released at 8:30 a.m.

In addition to jobs data, surveys of service sector purchasing managers are scheduled to be released starting at 9:45 a.m. from IHS Markit and the Institute for Supply Management at 10 a.m.

U.S. Treasury yields slipped slightly further on Wednesday after the Fed’s Beige Book indicated that the economy expanded overall at a “moderate pace.”

Separately, on Wednesday, the Fed announced that it would soon begin selling assets that it accumulated in its Secondary Market Corporate Credit Facility, or SMCCF, where it held $5.21 billion of corporate bonds and exchange-traded funds from companies including Whirlpool Corp., Walmart Inc. and Visa Inc.

In Fed speakers, Dallas Fed President Rob Kaplan is expected to speak at an event at Rice University at 1 p.m. Thursday, Philadelphia Fed President Patrick Harker will deliver a speech on building an equitable workforce at 1:50 p.m. and Fed Vice Chair for Supervision Randal Quarles will speak at a conference hosted by the Securities Industry and Financial Markets Association at 3:05 p.m.

What strategists and traders are saying

“Add a new suspense item to tomorrow’s payroll report. How much will trading volume rise in response to any number or surprise?” queried Jim Vogel, executive v.p. at FHN Financial in a Thursday note.  

“[Treasury] flows are near year-end holiday proportions because investors are waiting for the right combination of data and new developments before committing additional capital to bonds or returning to speculative trading. Economists know what they want to see in June and July, but the bond market only knows it hasn’t seen enough yet of whatever clues it is waiting for. Traders’ six-month zeal to run prices ahead of facts died much sooner than we anticipated even though we did expect a second quarter trading pause,” he wrote. 

He said that “May payroll numbers…will inform recovery headlines but not answer critical questions about consumption trends into the fourth quarter.”

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