Following the rally seen going into the close of the previous session, treasuries showed another strong move to the upside during trading on Thursday.
Bond prices moved sharply higher in early trading and saw continued strength as the day progressed. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, plunged 17.4 basis points to 3.529 percent.
The ten-year yield added to 4.5 basis point drop seen on Wednesday, ending the session at its lowest closing level in well over two months.
Treasuries continued to benefit from a positive reaction to Federal Reserve Chair Jerome Powell’s remarks providing further evidence the central bank plans to slow the pace of interest rate hikes as early as next month.
Adding to the optimism about slower rate hikes, a reading on inflation said to be preferred by the Fed showed core consumer prices rose by less than expected in October.
Core consumer prices, which exclude food and energy prices, edged up by 0.2 percent in October after climbing by 0.5 percent in September. Economists had expected prices to rise by 0.3 percent.
The annual rate of core consumer price growth also slowed to 5.0 percent in October from 5.2 percent in September, coming in line with estimates.
The inflation data was included as part of a Commerce Department report showing personal income increased by more than expected in the month of October.
The report said personal income climbed by 0.7 percent in October after rising by 0.4 percent in September. Economists had expected another 0.4 percent increase.
The Commerce Department said personal spending also advanced by 0.8 percent in October after climbing by 0.6 percent in September. The increase matched economist estimates.
A separate report released by the Labor Department showed first-time claims for U.S. unemployment benefits pulled back by more than expected in the week ended November 26th.
The report said initial jobless claims fell to 225,000, a decrease of 16,000 from the previous week’s revised level of 241,000.
Economists had expected jobless claims to edge down to 235,000 from the 240,000 originally reported for the previous week.
Meanwhile, the Institute for Supply Management released a report showing manufacturing activity contracted for the first time in over two years in the month of November.
The ISM said its manufacturing PMI slipped to 49.0 in November from 50.2 in October, with a reading below 50 indicating a contraction. Economists had expected the index to edge down to 49.8.
With the slightly bigger than expected decrease, the manufacturing PMI fell to its lowest level since hitting 43.5 in May of 2020.
Trading on Friday is likely to be impacted by reaction to the Labor Department’s closely watched monthly employment report for November.
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