U.S. Treasury yields fell on Thursday morning, with the 10-year yield dropping below 1.7% to start the month of April.
The yield on the benchmark 10-year Treasury note dipped to 1.684% at 11:00 a.m. ET. The yield on the 30-year Treasury bond fell to 2.356%. Yields move inversely to prices.
Investors juggled a handful of economic data as well as the aftermath of President Joe Biden’s announcement about a $2 trillion infrastructure bill.
First-time claims for jobless benefits were higher than expected last week, with 719,000 more workers heading to the unemployment line, the Labor Department reported Thursday. The total compared to the 675,000 estimate from Dow Jones and was above last week’s downwardly revised 658,000.
The key March jobs report will be released on Friday, although the stock market will be closed for the Good Friday holiday. Economists expect 630,000 jobs were added in March, and the unemployment rate fell to 6% from 6.2%, according to Dow Jones.
A measure of U.S. manufacturing activity soared to its highest level in more than 37 years in March, the Institute for Supply Management (ISM) said on Thursday. The index jumped to a reading of 64.7 last month from 60.8 in February.
Biden unveiled the infrastructure and economic recovery package on Wednesday evening. Biden’s plan included spending on transportation, broadband and affordable housing.
The 10-year Treasury yield has eased back since hitting a 14-month high earlier in the week. The 10-year yield has risen rapidly in recent months, up from less than 1% at the beginning of the year, amid concerns about inflation.
Despite market concerns, Federal Reserve Chairman Jerome Powell has said the central bank will let inflation run hotter if it helps achieve full employment.
Michael Moran, chief economist at Daiwa Capital Markets America, told CNBC’s “Squawk Box Europe” on Thursday that he believed the Fed would continue to “give some ground” to rising yields. He said that was with the understanding that “you have to price debt at its equilibrium level and if you have this degree of fiscal stimulus in place, your equilibrium interest rates are going to be higher than they are now.”
Moran, therefore, believed the Fed would continue with its current quantitative easing program and then “scale it back beginning next year.”
Auctions will be held Thursday for $40 billion worth of four-week bills and $40 billion worth of eight-week bills.
