Treasuries Move Modestly Higher Following Inflation, Jobless Claims Data

(RTTNews) - Treasuries saw modest strength during trading on Thursday, extending the upward move seen in the previous session.

Bond prices fluctuated early in the session but spent most of the day in positive territory. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, dipped 2.1 basis points to 4.011 percent.

The ten-year yield closed lower for the sixth time in the last seven sessions, dropping to its lowest closing level since early April.

The continued strength among treasuries came as traders digested separate Labor Department reports on consumer price inflation and weekly jobless claims.

A closely watched Labor Department report showed U.S. consumer prices rose by slightly more than expected in the month of August.

The Labor Department said its consumer price index climbed by 0.4 percent in August after inching up by 0.2 percent in July. Economists had expected consumer prices to rise by 0.3 percent.

The report also said the annual rate of consumer price growth accelerated to 2.9 percent in August from 2.7 percent in July, in line with economist estimates.

Meanwhile, the Labor Department said core consumer prices, which exclude food and energy prices, rose by 0.3 percent in August, matching the increase seen in July as well as expectations.

The annual rate of core consumer price growth in August was unchanged from the previous month at 3.1 percent, in line with economist estimates.

The Labor Department also released a report showing first-time claims for U.S. unemployment benefits unexpectedly increased in the week ended September 6th.

The report said initial jobless claims climbed to 263,000, an increase of 27,000 from the previous week's revised level of 236,000. Economists had expected jobless claims to edge down to 235,000 from the 237,000 originally reported for the previous week.

With the unexpected increase, jobless claims reached their highest level since hitting 268,000 in the week ended October 23, 2021.

While consumer prices rose slightly faster than expected on a monthly basis, the annual growth in line with estimates along with signs of weakness in the labor market added to recent optimism about the outlook for interest rates.

Following the reports, CME Group's FedWatch Tool is currently indicating a 92.9 percent chance the Federal Reserve will lower rates by a quarter-point next week and a slim 7.1 percent chance of a half- point rate cut.

Trading on Friday may be impacted by reaction to the University of Michigan's preliminary report on consumer sentiment in the month of September, which includes reading on consumers' inflation expectations.