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Treasuries Close Little Changed After Seeing Early Strength

After moving to the upside early in the session, treasuries gave back ground over the course of the trading day on Thursday before closing little changed.

Bond prices moved roughly sideways going into the close, lingering near the unchanged line. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by less than a basis point to 0.536 percent.

In early trading, the ten-year yield fell as low as 0.504 percent, its lowest intraday level since the record low set in early March.

Treasuries initially benefited from lingering uncertainty about a new coronavirus relief bill, as Democratic leaders and Trump administration officials continue to struggle to reach a deal.

Both sides have indicated progress following recent meetings, although Senate Minority Leader Chuck Schumer, D-N.Y., told reporters on Wednesday that "wide differences" remain on certain issues.

With the talks dragging on, the White House has suggested President Donald Trump could extend unemployment benefits and an eviction moratorium by executive order, although it is unclear if he has the authority to do so.

Treasuries gave back ground over the course of the session as traders looked ahead to the release of the Labor Department's closely watched monthly jobs report on Friday.

Economists currently expected employment to jump by about 1.6 million jobs in July after spiking by 4.8 million jobs in June. The unemployment rate is expected to dip to 10.5 percent from 11.1 percent.

Ahead of the monthly report, the Labor Department released a report this morning showing initial jobless claims pulled back by much more than expected in the week ended August 1st following two straight weekly increases.

The report said initial jobless claims tumbled to 1.186 million, a decrease of 249,000 from the previous week's revised level of 1.435 million.

Economists had expected jobless claims to edge down to 1.415 million from the 1.434 million originally reported for the previous week.

With the much bigger than expected decrease, jobless claims dropped their lowest level since the coronavirus-induced lockdowns in mid-March.

"The latest jobless claims data were much better than expected and suggest that the stalling in the labor market recovery in July didn't get worse as the month came to a close," said Nancy Vanden Houten, Lead U.S. Economist at Oxford Economics.

"We think there is some risk that the expiration of federal supplemental benefits discouraged some individuals for filing claims," she added. "If that's the case, initial claims would likely bounce back if and when those benefits are renewed."

The monthly jobs report is likely to be in focus on Friday, overshadowing reports on wholesale inventories and consumer credit.

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