Treasuries Close Roughly Flat After Seeing Early Weakness

(RTTNews) - Treasuries moved to the downside early in the session on Thursday but regained ground over the course of the trading day.

Bond prices climbed well off their early lows before ending the day roughly flat. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, closed unchanged at 4.180 percent after reaching a high of 4.225 percent.

The initial pullback by treasuries may partly have reflected profit taking following recent strength in the bond market, which has seen the ten-year yields fall to its lowest levels in over a month.

Selling pressure waned over the course of the session, however, as traders seemed reluctant to make significant moves ahead of the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expect employment to jump by 200,000 jobs in November after inching up by 12,000 jobs in October, while the unemployment rate is expected to tick up to 4.2 percent from 4.1 percent.

The jobs data could impact the outlook for interest rates ahead of the Federal Reserve's next monetary policy meeting later this month.

While traders have recently expressed greater confidence the Fed will lower rates by another 25 basis points at the December meeting, there remains uncertainty about the likelihood of continued rate cuts at future meetings.

"Taken together, the October and November reports should show trend job growth continuing at a pace that allows the Fed to lower rates by 25bps at the December 18 FOMC meeting but we expect them to skip cutting rates in January," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

With the monthly jobs report looming, the Labor Department released a report this morning showing a modest increase by first-time claims for U.S. unemployment benefits in the week ended November 30th.

The report said initial jobless claims rose to 224,000, an increase of 9,000 from the previous week's revised level of 215,000.

Economists had expected jobless claims to inch up to 215,000 from the 213,000 originally reported for the previous week.

While the monthly jobs report is likely to be in the spotlight on Friday, traders are also likely to keep an eye on a report on consumer sentiment, as it includes readings on consumers' inflation expectations. Remarks be several Fed officials may also attract attention.