US Treasuries Gain ahead of Employment Report

US Treasuries Gain ahead of Employment Report

2 June 2016, 15:33
Roberto Jacobs
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US Treasuries Gain ahead of Employment Report

The U.S. Treasuries gained on Thursday as investors were cautious ahead of May employment report on Friday. The yield on the benchmark 10-year Treasury note fell 1-1/2 basis point to 1.832 percent by 12:45 GMT.

The US Initial jobless claims for the week ending 28 May decreased -1k to 267k, versus the unrevised 268k reading seen in the week prior, below expectations for a 270k result. The 4-week average was reported at 276.8k, from the unrevised 278.5k reading seen in the week prior. Meanwhile, continuing claims for week ending 21 May increased to 2.172mln, versus the revised 2.160mln reading seen prior (prev. 2.163mln). The insured unemployment rate held unchanged at 1.6 percent.

The ADP employment estimate came in at +173k for May, versus the revised +166k increase seen in March (prev. +156k), alongside market expectations for a +175k result. Alongside the modestly improved increase seen in the headline reading, we anticipate a +180k increase in non-farm payrolls on Friday, coupled with a 4.9 percent headline unemployment rate.

Yesterday, the final Markit US manufacturing PMI reading decreased to 50.7 for May (preliminary 50.5), versus the 50.8 reading seen for April. This comes in just above market expectations for a 50.5 result. Moreover, MBA US Mortgage Applications Index decreased 4.1 percent for the week ending 27 May. According to the release, downward pressure stemmed decreases in both new purchases down -5.0 percent and refinancing activity -4.0 percent. Meanwhile, the FRM 30-Year held unchanged at 3.85 percent.

Meanwhile, S&P 500 Futures fell 4.25 points to 2,094 by 12:45 GMT.

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