Treasuries See Further Downside Amid Optimism About Soft Landing

(RTTNews) - Extending the pullback seen over the two previous sessions, treasuries showed a notable move to the downside during trading on Thursday.

Bond prices came under pressure early in the session and remained firmly negative throughout the day. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, climbed 5.5 basis points to 3.740 percent.

The ten-year yield closed higher for the third straight day, climbing further off the more than one-year closing low set on Monday.

The extended pullback by treasuries came as traders continued to digest the Federal Reserve's decision on Wednesday to slash interest rates by half a percentage point.

With the Fed saying officials have gained greater confidence inflation is moving sustainably toward its 2 percent target, the central bank lowered the target range for the federal funds rate by 50 basis points to 4.75 to 5.00 percent.

The Fed was almost universally expected to cut rates for the first time since March 2020, but there was some debate over whether it would lower rates by 25 or 50 basis points.

Fed officials also forecast continued rate cuts over the coming months and into next year, generating optimism the central bank will be able to engineer a soft landing for the economy and reducing the safe haven appeal of bonds.

Adding to the optimism about the economy, the Labor Department released a report showing first-time claims for U.S. unemployment benefits unexpectedly fell to a nearly four-month low in the week ended September 14th.

The report said initial jobless claims slid to 219,000, a decrease of 12,000 from the previous week's revised level of 231,000.

Economists had expected jobless claims to come in unchanged compared to the 230,000 originally reported for the previous week.

With the unexpected decline, jobless claims fell to their lowest level since hitting 216,000 in the week ended May 18th.

Following several key economic events earlier this week, the economic calendar for Friday is relatively quiet, potentially leading to light trading activity.