Yields mixed in choppy trading after jobless claims data

CHICAGO: US Treasury yields were flat to slightly lower in choppy trading on Thursday after data showed weekly initial jobless claims fell more than expected last week, but remained high as the coronavirus pandemic continued to weigh on the economy.

The benchmark 10-year yield was last down less than a basis point at 0.6445%.

Initial claims for state unemployment benefits totaled a seasonally adjusted 881,000 for the week ended Aug. 29, compared with 1.011 million in the prior week, the US Labor Department said on Thursday. Economists polled by Reuters had forecast 950,000 applications in the latest week.

Jon Hill, US interest rate strategist at BMO Capital Markets in New York, said there was not a lot of conviction for going into a strong position in the market given Friday's release of August employment data, Monday's Labor Day holiday, and mixed signals on the economy.

"We're in this dynamic where there are a lot of back-and-forth signals," he said. "Treasuries are trading somewhat choppy as traders are trying to balance their books going into non-farm payrolls and the long weekend."

Hill added that it has been hard for the market to trade on any data "with high confidence."

"Because at the end of the day the two most important things are what happens with the virus and soon to be, what's going on with the (Nov. 3 US) election," he said.

The two-year US Treasury yield, which typically moves in step with interest rate expectations, was down less than a basis point at 0.1309%.

A closely watched part of the US Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, which is viewed as an indicator of economic expectations, was last at 50.50 basis points, less than a basis point lower than at Wednesday's close.