The number of Americans filing new claims for unemployment benefits increased moderately last week, suggesting that the labor market was gradually slowing. A report by the Philadelphia Federal Reserve, meanwhile, showed that manufacturing activity in the mid-Atlantic unexpectedly contracted in April. “I would say this move in response to the data today is probably more a function of a quiet market than anything,” said Ben Jeffery, an interest rate strategist at BMO Capital Markets in New York. “We’re approaching the pre-meeting quiet period for the Fed speak; I think the data is going to be relatively limited until we get the first look at GDP next week.” Fed officials will go into a blackout period from April 22 ahead of the May 2-3 meeting. Treasury yields are seen as likely to stay rangebound as investors wait on major data on gross domestic product, inflation and jobs for further guidance on whether the Fed is likely to continue hiking rates after an expected 25 basis points increase in May. Yields had also dipped earlier on Thursday after German producer prices and New Zealand consumer price inflation came in below expectations.
Benchmark 10-year note yields were last at 3.541%, down 6 basis points on the day. The yields have some technical resistance around the 3.50% area, and support at 3.65% to 3.70%. Two-year yields fell 9 basis points to 4.176%. The inversion in the yield curve between two-year and 10-year notes contracted to minus 64 basis points. The Treasury will sell $21 billion in five-year Treasury Inflation-Protected Securities (TIPS) on Thursday. Investors are also focused on negotiations in Washington to raise the debt ceiling or risk a catastrophic debt default. Republican U.S. House of Representatives Speaker Kevin McCarthy on Wednesday unveiled a plan to raise the nation's debt ceiling by $1.5 trillion and cut federal spending by three times that amount, laying out an opening position in what is likely to be a tense partisan debate over government borrowing.
April 20 Thursday 9:30AM New York / 1330 GMT
Price Current Net
Yield % Change
(bps)
Three-month bills 4.9875 5.1206 -0.033
Six-month bills 4.8675 5.0728 -0.019
Two-year note 99-113/256 4.1763 -0.089
Three-year note 99-162/256 3.8813 -0.090
Five-year note 99-244/256 3.6351 -0.087
Seven-year note 100-60/256 3.5863 -0.075
10-year note 99-168/256 3.5413 -0.061
20-year bond 100-8/256 3.8724 -0.040
30-year bond 97-180/256 3.7534 -0.036
DOLLAR SWAP SPREADS
Last (bps) Net
Change
(bps)
U.S. 2-year dollar swap 29.25 -0.25
spread
U.S. 3-year dollar swap 18.25 -1.50
spread
U.S. 5-year dollar swap 7.25 -0.50
spread
U.S. 10-year dollar swap -0.75 0.25
spread
U.S. 30-year dollar swap -41.75 0.25
spread
(Reporting by Karen Brettell; editing by Jonathan Oatis)
