After ending the previous session notably lower, treasuries showed a strong move back to the upside on Thursday in reaction to the latest headlines out of Europe.
Bond prices moved sharply higher over the course of the morning but gave back some ground in the afternoon. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, fell by 6.1 basis points to 1.478 percent.
The strength among treasuries came as traders reacted to comments by European Central Bank President Mario Draghi, who traders felt failed to live up to last week's promise to do whatever is necessary to support the beleaguered eurozone.
Speaking at a press conference following the ECB's monetary policy meeting, Draghi told reporters that the central bank "may undertake outright open market operations."
However, traders seemed disappointed that there was not more conviction behind Draghi's remarks and looked to the relative safety of U.S. bonds.
Carl Weinberg, Chief Economist at High Frequency Economics, said, "Once again, we have no commitment to action from the ECB, and no execution of promises previously made."
"Nothing seems set to happen now," he added. "Traders and investors who expected immediate action are, and should be, disappointed."
As a result of the focus on Europe, traders largely shrugged off the release of a report from the Labor Department showing a smaller than expected increase in weekly jobless claims.
The report showed that initial jobless claims crept up to 365,000 in the week ended July 28th from the previous week's revised figure of 357,000. Economists had expected jobless claims to climb to 370,000 from the 353,000 originally reported for the previous week.
While monetary policy has been in focus over the past two days, the monthly U.S. jobs report is likely to take center stage on Friday.
Economists currently expect the Labor Department report to show that U.S. employment rose by about 100,000 jobs in July following a weaker than expected increase of 80,000 jobs in June.
The Institute for Supply Management is also due to release a separate report on activity in the service sector, although the data is likely to be overshadowed by the jobs report.
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Job report may show 115,000 for July if BLS data is similar to Biderman's real time data. That usually would send the bond market down and stock market up, but since bad is good, does that mean good is bad?
It is very scary up here with the 30 year bond prices at a Yearly R1. Will they go to Yearly R2 which will put long term interest rates in the 2's or will the stock market shoot up like a rocket to the moon. Huh, to be or not to be. Sometimes it pays to sit on my hands.