Treasuries showed substantial weakness throughout the trading session on Thursday, as investors moved their money from the safety of bonds to fund another considerable rally in the stock market.
Traders have favored forward looking economic data this week, including better-than-expected pending home sales figures, while shrugging of lagging economic indicators such as today's disappointing unemployment data.
The benchmark ten-year note treaded in negative territory early before plummeting further downward in the late morning. Subsequently, the yield on the ten-year note closed at 2.752 percent, up 9.4 basis points on the day.
Meanwhile, the Dow continued to add to its recent gains, with the blue chip index up by more than 270 points at the close of the bond market. The rally reflected some optimism about stabilization in the economy.
Data released by the Commerce Department showed that factory orders rose 1.8 percent in February following a revised 3.5 percent decrease in January. Economists had been expecting orders to rise by 1.5 percent compared to the 1.9 percent decrease originally reported for the previous month.
Meanwhile, the Labor Department said that initial jobless claims in the week ended March 28th unexpectedly rose to 669,000 from the previous week's revised figure of 657,000. With the increase, jobless claims rose to a new twenty-six year high.
While the data added to concerns about Friday's monthly employment report, Peter Boockvar of Miller Tabak noted, Participants are looking past this employment data and placing their chips on the 'worst is over' belief and the still worsening labor market is a lagging indicator.
Friday morning, the government is set to report the most significant piece of employment data. Economists expect the report to show a decline of 658,000 jobs in March following a decrease of 651,000 jobs in February. Meanwhile, the unemployment rate is expected to edge up to 8.5 percent.
In other news, the New York Fed purchased approximately $7.5 billion worth of long-term securities with maturity dates ranging from September of 2013 to February of 2016. The program has seen strong interest, with dealers submitting a total of $26.25 billion in treasuries for the purchase.
The government also revealed that it would sell $6.0 billion of the 10-year inflation immune treasuries, also called TIPS, next Tuesday at 1 PM ET.
Investors will be especially focused on the ten-year TIPS auction, as the spread between the security and the regular ten-year note will give an indication of near-term inflation.
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