The yield on US Treasury bonds declined moderately, while market participants continued to analyze the latest data on the US labor market, which indicated that last week initial jobless claims unexpectedly fell to a nearly four-month low.
The yield on 5-year Treasury bonds decreased by 2.6 basis points, reaching 3.479%, while the yield on 30-year bonds was 4.035% (-3.9 basis points). Meanwhile, the yield on 2-year Treasury bonds, reflecting expectations of short-term interest rates, fell by 2.1 basis points to 3.583%, while the yield on 10-year bonds fell to 3.709% (-3.1 basis points).
Yesterday, the Labor Department said that initial jobless claims decreased by 12,000, to 219,000. Economists had expected initial jobless claims to reach 230,000. With the unexpected decline, jobless claims fell to their lowest level since hitting 216,000 in the week ended May 18th. Earlier this week, the Fed sent a strong signal that it will likely lower rates another 0.5% this year to preserve current labor market conditions.
There is no U.S. economic data scheduled for release today, but Philadelphia Federal Reserve President Patrick Harker will speak at 18:00 GMT. Meanwhile, next week the final GDP report for the 2nd quarter will be released, as well as the Fed's preferred inflation indicator - the personal consumption expenditure price index for August.