US Treasury prices barely budged on Wednesday, closing the session fractionally higher in limited pre-holiday trade despite a drop in jobless claims.
First-time claims for state unemployment benefits declined to 339,000 last week from a revised 354,000 the previous week. Analysts had expected a slight rise to 355,000.
It was the lowest level since January 2001 and should encourage those looking for a decent gain in the government's monthly payrolls report next week.
Continued claims did climb 81,000 to 3.32 million, but the four-week average for weekly claims hit its lowest level in almost three years.
"It's a surprisingly low number and would suggest that the labour market continues to improve," said Stephen Stanley, senior market economist at RBS Greenwich.
"We're just going to have to wait for the next payroll number to have a good sense, because these weekly numbers do tend to be quite volatile," Stanley said.
Median forecasts are for payrolls to rise by 125,000 in December, after a surprisingly muted 57,000 gain the month before.
The absence of many investors from the market on the eve of the New Year prevented price moves from extending beyond a couple of basis points here and there.
The benchmark 10-year Treasury note ticked 2/32 higher in price, taking its yield to 4.25 percent. That leaves it roughly in the middle of the range of 4.10 percent to 4.50 percent that has held for the last three months or more.
Two-year notes were flat for a yield of 1.84 percent.
Five-year notes added 1/32, yielding 3.22 percent. The 30-year bond rose 2/32, giving a yield of 5.07 percent from 5.08 percent.
The dollar was again a talking point as it carved out fresh lows against the euro.
The currency's slide could be a real threat to Treasuries as it may frighten foreign investors away from US assets, while sustained weakness could generate domestic inflation.
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