After seeing early weakness, treasuries regained ground over the course of the trading session on Thursday to end the day nearly flat.
Bond prices spent much of the afternoon bouncing back and forth across the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, inched up by less than a basis point to 1.387 percent.
The roughly flat close by treasuries came ahead of the release of the Labor Department’s closely watched monthly jobs report on Friday.
The report is expected to show an increase of about 180,000 jobs in June after employment edged up by just 38,000 jobs in May. The unemployment rate is expected to tick up to 4.8 percent from 4.7 percent.
The minutes of the Federal Reserve’s last monetary policy meeting suggested that the disappointing May jobs report played a role in the central bank’s decision to leave interest rates unchanged last month.
With the Fed indicating it would wait for additional data regarding labor market conditions before removing monetary accommodation, the June jobs report could have an impact on the outlook for rates.
Ahead of the Labor Department report, payroll processor ADP released a report this morning showing stronger than expected private sector job growth in June.
ADP said private sector employment climbed by 172,000 jobs in June following a downwardly revised increase of 168,000 jobs in May. Economists had expected an increase of about 150,000 jobs.
Rob Carnell, Chief International Economist at ING Commercial Banking, said, “With very little difference in the June ADP from the May figure, we are left none the wiser about the likely direction of tomorrow’s non-farm payrolls release and other labor data.”
“But our sense from the other labor data is that the underlying picture in the labor market remains much stronger than the recent payrolls headlines have suggested,” he added.
A separate report from the Labor Department showed an unexpected pullback in initial jobless claims in the week ended July 2nd.
Reaction to the monthly jobs report is likely to drive trading on Friday, as traders attempt to gauge how the data affects the outlook for interest rates.
The material has been provided by InstaForex Company – www.instaforex.com