NEW YORK -- U.S. Treasury debt prices slipped Thursday after a report showing fewer-than-expected jobless claims suggested to traders that economic growth may not be slowing as quickly as originally thought.
The Federal Reserve is expected to be watching the labor market closely as it tries to balance slowing economic growth with price inflation that remains above the central bank's presumed comfort level.
Data showed initial filings for state unemployment insurance aid fell for the fifth straight week to the lowest level since mid-January, dropping to a seasonally adjusted 293,000 in the week ended May 12. Analysts on Wall Street had expected claims, which provide a rough guide to the pace of layoffs, to rise to 310,000.
"It's an improvement. We had two in a row below 300,000 ... That's obviously going to weigh on bond prices a little bit here." said Beth Malloy, bond market analyst at Briefing.com in Chicago.
Benchmark 10-year notes were trading 8/32 lower in price for a yield of 4.75 percent, the highest yield level in a month, from 4.72 percent late Wednesday. Bond yields move inversely to prices.
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Traders are now looking ahead to a speech from Fed Chairman Ben Bernanke, who will talk about the subprime mortgage market and regulations later Thursday morning. However, Bernanke may not address the economy or monetary policy. Subprime mortgages are extended to borrowers with poor credit history.
"We expect Bernanke to stick to the topic of regulation, while comments on subprime are likely to be consistent with prior statements that there's been little spillover to the prime market or the economy as a whole," Action Economics, LLC said in a note to clients.
Also later Thursday, data will be released on April leading indicators, along with the May Philadelphia Fed business activity index.
A rising stock market this week has put some downward pressure on bond prices, although stock futures slipped Thursday amid higher oil prices.
Two-year Treasury notes were trading 2/32 lower in price for a yield of 4.78 percent from 4.74 percent late Wednesday, while five-year notes were 4/32 lower for a yield of 4.66 percent from 4.63 percent.
Thirty-year bonds were 12/32 lower in price for a yield of 4.91 percent.
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