U.S. Treasury yields extend weekly slide ahead of data deluge

U.S. Treasury yields fell in early Thursday trade as investors awaited a rush of economic data amid a souring of sentiment over the spread of COVID-19 in Europe.

What are Treasurys doing?

The 10-year Treasury note yield
fell 2.1 basis points to 0.701%, down around 7 basis points from where the maturity ended last Friday, while the 2-year note rate
edged 0.4 basis point down to 0.135%. The 30-year bond yield
slid 3.1 basis points to 1.468%. Bond prices move inversely to yields.

What’s driving Treasurys?

Investors fretted over the possibility of new lockdown measures after Paris and London have both instituted limits to social activity in a bid to contain the spread of the coronavirus.

Fresh restrictions are likely to dampen the budding recovery across the eurozone, weighing on U.S. and European equity markets to the benefit of Treasurys.

Analysts will have plenty of data to sift through in the morning. Data on new applications for unemployment benefits during the latest weekly period ending in Oct. 10 are due at 8:30 a.m. ET, with MarketWatch-polled analysts penciling in a drop of 15,000 to 825,000.

Surveys of manufacturing activity in New York state and the region around Philadelphia along with the September import price index are all set for release at the same time as jobless claims.

Several senior Federal Reserve officials will come out and speak on Thursday, including Fed vice chairman for supervision Randal Quarles.

On Wednesday, Quarles said he was worried the Treasury market had become so large that the Fed’s presence would be needed to ensure its normal and orderly functioning.

What did market participants say?

“Over most of Europe Covid-19 cases continued to rise sharply…with new recorded highs being registered in many countries including those that used to experience lower numbers such as Germany,” said Peter Schaffrik, global macro strategist at RBC Capital Markets.

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