Treasury yields pared earlier gains and traded near the flatline as a weaker-than-expected reading of jobless claims showed signs of a slowdown in labor market recovery due to the worsening pandemic.
The yield on the benchmark 10-year Treasury note was little changed at 1.089%, while the yield on the 30-year Treasury bond was also flat at 1.821%. Yields move inversely to prices.
First-time filings for unemployment insurance jumped to 965,000 last week, the Labor Department said Thursday. Economists surveyed by Dow Jones were looking for 800,000 new claims, up slightly from the 787,000 the week before.
“The rise in initial unemployment claims is bad news for economy the short term, but it was not unexpected,” said Brad McMillan, CIO at Commonwealth Financial Network. “The economic impact will be limited by the recently passed stimulus bill, which will provide support for those laid off and help preserve confidence and purchasing power.”
President-elect Joe Biden is expected on Thursday evening to unveil a stimulus plan that will include a boost to the recent $600 direct payments, an extension of increased unemployment insurance and support for state and local governments. The stimulus could be as big as $2 trillion, CNN reported.
“The market will get a look as how the stimulus effort compares to last year’s $2 trillion CARES Act,” Ian Lyngen, BMO’s head of U.S. rates, said in a note. “The near-term upside for the economic outlook linked to greater fiscal support has been constructive on net.”
The benchmark 10-year rate had climbed to a near 10-month high earlier this week after breaching the `% level to start the new year. The yield came under pressure on Wednesday after the December inflation data showed price pressure remained subdued.
