U.S Treasury yields fell on Thursday, ceding more ground on Friday after data showed weekly initial jobless claims rose more than expected last week, while stocks on Wall Street sold off to sap risk appetite. The two-year yield dropped 30 basis points, while that of the 10-year paper was down 13 bps since Wednesday's close.
The jobless claims data comes ahead of Friday's payrolls report, which is expected to show an increase of 205,000 jobs in February after surging 517,000 in January, according to a Reuters survey of economists. A softening job market could calm the fears of an aggressive rate hike by the Federal Reserve in less than two weeks when the central bank's policy meeting is due. Fed funds futures are now pricing a 52% chance for a 50 bps hike in March, down from 68% after Chair Jerome Powell's comments. India and U.S. retail inflation data are due on Tuesday, which would provide more clarity on interest rate decisions in both countries. Retail inflation in India likely eased last month but stayed above the Reserve Bank of India's upper threshold for a second straight month. A Reuters poll of 43 economists predicted inflation at 6.35% in February, down from 6.52% in January. The RBI has raised the repo rate by 250 bps to 6.50% this financial year and is likely to increase it by 25 bps in April. (Reporting by Dharamraj Dhutia Editing by Eileen Soreng)
