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May 6, 2021, 3:50 p.m. EDT

10-year Treasury yield marks fifth straight drop ahead of jobs report

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By Sunny Oh

U.S. Treasury yields ground lower on Thursday as the bond market extended a data-defying rally, raising questions whether traders will respond to Friday’s jobs report.

What are Treasurys doing?

The 10-year Treasury note yield /zigman2/quotes/211347051/realtime BX:TMUBMUSD10Y -4.46% fell 2.3 basis points to a two-week low of 1.561%. The 30-year bond yield /zigman2/quotes/211347052/realtime BX:TMUBMUSD30Y -5.27% slid 2.2 basis points to a three-week low of 2.236%, while the 2-year note rate /zigman2/quotes/211347045/realtime BX:TMUBMUSD02Y +1.97% was steady at 0.155%.

What’s driving Treasurys?

The latest weekly data showed Americans filing for unemployment benefit had fallen to a pandemic low of 498,000, falling well below the estimates of MarketWatch-polled economists, who had penciled in a drop to 527,000, down from 590,000.

Jobless claims have steadily trended lower as the U.S. economy reopens with the aid of direct payments to households and a nationwide vaccination campaign.

Investors have argued a string of improving labor-market data could prompt more discussions of removing policy accommodation from senior Federal Reserve officials. But the bond market has largely looked past the signs of reflation, suggesting traders may shrug off another blockbuster April jobs report on Friday.

Economists say the U.S. probably added one million new jobs last month, according to a survey by Dow Jones and The Wall Street Journal. Some Wall Street firms such as Jefferies LLC even predict net job gains could top 2 million

In other data, U.S. productivity for the first quarter grew by 5.4%, surpassing forecasts for a 4.5% increase.

Elsewhere,   the Bank of England said the pace of continuing government bond purchases could be “slowed somewhat.” Still, its policymaking committee voted to maintain its target for U.K. government bond purchases at £875 billion ($1.22 trillion).

What did market participants say?

“Talking of the Fed, the speakers so far this week have offered a mixed bag of comments regarding inflation and the prospect of tapering the central bank’s QE program,” said John Velis, macro strategist at BNY Mellon.

“The labor market is key to this debate, and Friday’s data will likely make good reading on that front. If we do get a print close to a million new jobs, it will likely mean that the services sector, especially leisure and hospitality, will show the biggest gains,” said Velis.

/zigman2/quotes/211347051/realtime
add Add to watchlist BX:TMUBMUSD10Y
BX : Tullett Prebon
1.51
-0.07 -4.46%
Volume: 0.00
June 17, 2021 4:54p
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/zigman2/quotes/211347052/realtime
add Add to watchlist BX:TMUBMUSD30Y
BX : Tullett Prebon
2.10
-0.12 -5.27%
Volume: 0.00
June 17, 2021 4:54p
loading...
/zigman2/quotes/211347045/realtime
add Add to watchlist BX:TMUBMUSD02Y
BX : Tullett Prebon
0.22
+0.0042 +1.97%
Volume: 0.00
June 17, 2021 4:56p
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