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Bond Report: 10-and 30-year Treasury yields edge back ahead of weekly U.S. labor-market update

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Long-dated Treasury yields slipped Thursday, as U.S. stocks relinquished some ground following three straight days of gains.

Bond investors are awaiting the U.S. November consumer-price index report on Friday and a Federal Reserve policy meeting next week.

What are yields doing?
  • The 10-year Treasury note yield
    TMUBMUSD10Y,
    1.482%

    was at 1.478%, down from 1.508% on Wednesday at 3 p.m. Eastern Time.
  • The 30-year Treasury bond rate
    TMUBMUSD30Y,
    1.848%

    was at 1.797%, 7.7 basis points lower from 1.874% a day ago.
  • The 2-year Treasury note
    TMUBMUSD02Y,
    0.675%

    yields 0.687%, up from 0.677%.
What’s driving the market?

Treasurys yields were seeing some modest buying on Thursday, nudging prices higher and yields lower, as U.S. stocks looked set to give up some ground after a three day rally that has driven indexes nearer to records, following a bout of selling last week on fears the omicron variant of the coronavirus would slow the economy.

Despite the moves in stocks, yields for debt are still comparatively low historically ahead of a report on consumer inflation on Friday, which could provide the spark for a fresh move in fixed income.

A decision by Fitch Ratings to lower the credit rating of Chinese hombuilder Evergrande HK:3333, however, has been blamed for some of the softness in risk assets, with the move igniting fresh fears around the Chinese property sector.

On Wednesday, equity markets got a boost from a report from Pfizer Inc. PFE and BioNTech SE, which said results from an “initial laboratory study”showed that their COVID-19 vaccine neutralized the omicron variant after three doses, or the full two-dose regimen plus a booster shot. Still, Pfizer said it was working on a booster to combat omicron.

Market participants also await economic reports for Thursday, including a weekly update of those seeking jobless claims benefit insurance in America, which will be released at 8:30 a.m. Economists polled by Dow Jones on average estimate an increase 211,000 in initial jobless claims for the week ended Dec. 4, while those at Econoday are estimating 223,000, after last week’s claims came in at 222,000, rising from a pandemic low.

An updated reading of wholesale inventories for October is slated for 10 a.m., with economists on average estimating a rise of 2.1%, compared with a prior reading of 1.4%.

Looking ahead, investors will be watching an auction of 30-year Treasury bonds at 1 p.m. Eastern Time, which could influence trading in the market for government debt.

What strategists are saying

“Markets have held very tight to the ‘cumulative’ end game for the potential new tightening cycle. And likely for good reason: history is not on the side of successful liftoff. The elimination of emergency asset purchases is long overdue. But the pathway to neutral (2.50%) will not be an easy one despite what the DOT plot may signal next week,” wrote Greg Faranello, head of U.S. rates at AmeriVet Securities, in a daily note.

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