Treasuries Move Back To The Downside Amid Ongoing Rate Worries

Following the rebound seen in the previous session, treasuries showed a notable move back to the downside during trading on Thursday.

Bond prices moved steadily lower over the course of morning trading and remained firmly negative throughout the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, jumped 6.2 basis points to 4.647 percent.

The ten-year yield largely offset the 7.4 basis point slump seen on Wednesday but ended the day just shy of Tuesday's five-month closing high.

Concerns about the outlook for interest rates continued to weigh on treasuries, as the Federal Reserve is now widely expected to hold off on cutting rates until at least July.

Potentially adding to the interest rate worries, the Philadelphia Federal Reserve released a report showing a considerable acceleration in the pace of growth in regional manufacturing activity in the month of April.

The Philly Fed said its diffusion index for current general activity jumped to 15.5 in April from 3.2 in March, with a positive reading indicating growth. Economists had expected the index to edge down to 1.5.

Notably, the report also said the prices paid index surged to 23.0 in April from 3.7 in May, reaching its highest reading since December 2023.

Quincy Krosby, Chief Global Strategist for LPL Financial, said the spike by the prices paid index supports "the Fed's concerns regarding inflationary pressures stalling in its downward trajectory."

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits remained flat in the week ended April 13th.

The report said initial jobless claims came in at 212,000, unchanged from the previous week's revised level. Economists had expected jobless claims to rise to 215,000 from the 211,000 originally reported for the previous week.

"Jobless claims remain well below levels that would signal a major slowdown in job growth," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

She added, "A strong labor market gives the Federal Reserve the room to put off rate cuts until inflation gets back on a sustainable path to 2%."

Meanwhile, the National Association of Realtors released a report showing a sharp pullback by existing home sales in the U.S. in the month March.

NAR said existing home sales plunged by 4.3 percent to an annual rate of 4.19 million in March after surging by 9.5 percent to a rate of 4.38 million in February. Economists had expected existing home sales to slump to a rate of 4.20 million.

A lack of major U.S. economic data may lead to choppy trading on Friday, as traders look ahead to next week's reports on new home sales, durable goods orders and personal income and spending.

The Commerce Department's personal income and spending report includes readings on inflation said to be preferred by the Fed.

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