Treasuries Move Sharply Higher Amid Optimism About Interest Rates

Treasuries moved sharply higher during trading on Thursday, extending the strong upward move seen over the course of the previous session.

Bond prices gave back some ground after an early surge but remained firmly positive. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, tumbled by 12.0 basis points to 4.669 percent.

The ten-year yield added to the 8.6 basis point drop seen on Wednesday, falling to its lowest closing level in almost three weeks.

The extended rally by treasuries came as the latest economic data added to the optimism the Federal Reserve is done raising interest rates.

The Labor Department released a report showing an unexpected uptick in first-time claims for U.S. unemployment benefits in the week ended October 28th.

The report said initial jobless claims crept up to 217,000, an increase of 5,000 from the previous week’s revised level of 212,000.

Economists had expected jobless claims to come in unchanged compared to the 210,000 originally reported for the previous week.

A separate report from the Labor Department also showed an unexpected decrease in unit labor costs in the third quarter.

The Labor Department said unit labor costs fell by 0.8 percent in the third quarter after shooting up by a revised 3.2 percent in the second quarter.

Unit labor costs were expected to climb by 0.7 percent compared to the 2.2 percent increase that had been reported for the previous quarter.

On Friday, the Labor Department is scheduled to release its closely watched report on employment in the month of October.

Economists currently expected employment to increase by 180,000 jobs in October after surging by 336,000 jobs in September. The unemployment rate is expected to remain at 3.8 percent.

The monthly jobs report is likely to be in the spotlight on Friday, as traders look for additional clues about the outlook for interest rates.

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