After falling sharply early in the session, treasuries recovered over the course of the trading day on Thursday before closing modestly higher.
Bond prices showed a notable turnaround in morning trading before hovering in positive territory in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.3 basis points to 0.669 percent.
The ten-year yield spiked to a higher of 0.724 percent immediately following the release of a closely watched Labor Department report showing another record spike in employment in the month of June.
The report said non-farm payroll employment skyrocketed by 4.8 million jobs in June after soaring by an upwardly revised 2.7 million jobs in May.
Economists had expected employment to surge up by about 3.0 million jobs compared to the spike of 2.5 million jobs originally reported for the previous month.
The Labor Department also said the unemployment rate dropped to 11.1 percent in June from 13.3 percent in May. The unemployment rate had been expected to dip to 12.3 percent.
The data initially added to optimism about an economic recovery, although a number of economists pointed out that the employment numbers are still well below pre-pandemic levels.
“The 4.8 million rise in non-farm payrolls in June provides further confirmation that the initial economic rebound has been far faster than we and most others anticipated,” said Michael Pearce, Senior U.S. Economist at Capital Economics.
He added, “But that still leaves employment 9.6% below its February level and with the spread of the virus accelerating again, we expect the recovery from here will be a lot bumpier and job gains far slower on average.”
Meanwhile, a separate Labor Department report showed first-time claims for U.S. unemployment benefits fell by much less than expected in the week ended June 27th.
The Labor Department said initial jobless claims dropped to 1.427 million, a decrease of 55,000 from the previous week’s revised level of 1.482 million.
Economists had expected jobless claims to tumble to 1.355 million from the 1.480 million originally reported for the previous week.
The report also showed an increase in continuing claims, a reading on the number of people receiving ongoing unemployment assistance, which climbed by 59,000 to 19.290 million in the week ended June 20.
In other U.S. economic news, the Commerce Department released a report showing the U.S. trade deficit widened more than expected in the month of May amid a steep drop in the value of exports.
Following the long holiday weekend, next week’s trading may be impact by the latest news on the coronavirus front as well as reports on service sector activity and producer price inflation.
Bond traders are also likely to keep an eye on the results of the Treasury Department’s auctions of $46 billion worth of three-year notes, $29 billion worth of ten-year notes and $19 billion worth of thirty-year bonds.
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