Treasuries Close Higher Following Significant Volatility

Treasuries showed wild swings over the course of morning trading on Thursday before moving to the upside in the afternoon.

Bond prices gave back some ground going into the close but managed to remain in positive territory. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 3.5 basis points to 0.729 percent.

The volatility on the day came as traders weighed some troubling economic data against the Federal Reserve’s latest efforts to support the economy.

Early in the day, the Fed took additional actions to provide up to $2.3 trillion in loans to support the economy during the ongoing coronavirus pandemic.

The Fed said the funding will assist households and employers of all sizes and bolster the ability of state and local governments to deliver critical services during the coronavirus pandemic.

Meanwhile, the Labor Department released a report showing another jump in first-time claims for unemployment benefits.

The Labor Department said 6.606 million people filed for unemployment last week, a decrease of 261,000 from the previous week’s upwardly revised level of 6.867 million but well above economist estimates for 5.250 million new claims.

The spike in initial jobless claims in the latest week brings the total since the coronavirus-induced shutdown to 16.780 million.

Preliminary data from the University of Michigan also showed a record-breaking decline in U.S. consumer sentiment in the month of April.

The report said the consumer sentiment index plummeted to 71.0 in April after plunging to 89.1 in March. Economists had expected the index to tumble to 75.0.

Surveys of Consumers chief economist Richard Curtin noted the 30-point drop seen over the past two months was 50 percent larger than the prior record.

In other economic news, the Labor Department released a report showing a modest decrease in producer prices in the month of March amid another steep drop in energy prices.

The Labor Department said its producer price index for final demand dipped by 0.2 percent in March after sliding by 0.6 percent in February. Economists had expected prices to drop by 0.4 percent.

Meanwhile, the report said core producer prices, which exclude food and energy prices, rose by 0.2 percent in March after slipping by 0.3 percent in February. Core prices were expected to show no change.

Following the long weekend, next week’s trading is likely to driven by reaction to the latest coronavirus news, although reports on retail sales, industrial production and housing starts may also attract attention.

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