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Bond Report: 10-year Treasury yield flirts with record low ahead of weekly jobless claims

Bond Report

Treasury yields inched lower on Thursday ahead of a snapshot of the labor market’s strength amid growing worries that the recovery in U.S. employment is taking a longer time than hoped as coronavirus cases rise in many states.

What are Treasurys doing?

The 10-year Treasury note yield

fell 2.1 basis points to 0.522%, near its all-time closing low of 0.501%, while the 2-year note rate

edged 0.4 basis point down to 0.113%. The 30-year bond yield

slipped 2.9 basis points to 1.190%.

See: Here’s why the 10-year yield is a whisker away from setting a new record low

What’s driving Treasurys?

The weekly jobless claims numbers will command the attention of the market on Thursday, with MarketWatch-polled economists forecasting 1.4 million Americans to have filed unemployment benefits in the latest weekly period.

The labor-market data will come ahead of the official monthly employment report on Friday. Analysts warn other employment indicators could point to fewer job gains in July, a risk to markets that have betted on a sharp economic rebound after a dismal second-quarter this year.

Job cuts announced by U.S.-based employers jumped in July to 262,649, the third-largest monthly total ever, according to global outplacement firm Challenger, Gray & Christmas.

These concerns were shared by senior Federal Reserve officials. Cleveland Fed President Loretta Mester on Wednesday said the U.S. labor market is even weaker than the data indicates. Meanwhile, Dallas Fed President Robert Kaplan is due to speak at 10 a.m. ET.

The Bank of England held interest rates at zero and did not expand the size of its bond-buying program. Their policymaking committee noted it might take the U.K.’s annual economic output until the end of next year to return to levels last recorded at the end of 2019.

Negotiations over another fiscal stimulus package ran on in Congress. White House officials said that if a deal is not reached by Friday, talks are likely to stop during the summer recess.

What did market participants’ say?

“The bar is high for the U.S. 10-year to have another go at 0.50% unless risk assets swoon and Congress cannot agree on a stimulus bill before the weekend,” said Kenneth Broux, a strategist at Société Générale.

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